Problem $11-20$ Project Analysis $[$LO$1,2]$

McGilla Golf has decided to sell a new line of golf clubs. The clubs will sell for $$840$ per

set and have a variable cost of $$400$ per set. The company has spent $$290,000$ for a

marketing study that determined the company will sell $69,100$ sets per year for seven

years. The marketing study also determined that the company will lose sales of $12,800$

sets of its high$-$priced clubs. The high$-$priced clubs sell at $$1,210$ and have variable costs

of $$670.$ The company will also increase sales of its cheap clubs by $14,800$ sets. The

cheap clubs sell for $$430$ and have variable costs of $$220$ per set. The fixed costs each

year will be $$10,500,000.$ The company has also spent $$2,400,000$ on research and

development for the new clubs. The plant and equipment required will cost $$38,700,000$

and will be depreciated on a straight$-$line basis. The new clubs will also require an

increase in net working capital of $$3,100,000$ that will be returned at the end of the

project. The tax rate is $24$ percent, and the cost of capital is $12$ percent.

a$.$ Calculate the payback period. $($Do not round intermediate calculations and round

your answer to $3$ decimal places, e$.$g$.,32\mathrm{.}161.)$

b$.$ Calculate the NPV$.($Do not round intermediate calculations and round your answer

to $2$ decimal places, e$.$g$.,32\mathrm{.}16.)$

c$.$ Calculate the IRR. $($Do not round intermediate calculations and enter your answer as

a percent rounded to $2$ decimal places, e$.$g$.,32\mathrm{.}16.)$