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McGilla Golf has decided to sell a new line of golf clubs. The length of this...

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Finance

McGilla Golf has decided to sell a new line of golf clubs. Thelength of this project is seven years. The company has spent$138237 on research and development for the new clubs. The plantand equipment required will cost $2829364 and will be depreciatedon a straight-line basis. The new clubs will also require anincrease in net working capital of $127415 that will be returned atthe end of the project. The OCF of the project will be $811598. Thetax rate is 32 percent, and the cost of capital is 7 percent. Whatis the NPV for this project?

Answer & Explanation Solved by verified expert
4.0 Ratings (534 Votes)
Annual depreciation Cost of equipmentUseful life 28293647 40419486 Computation of annual cash flow Operating cash flow 81159800 Less depreciation 40419486 PBT 40740314 Less Tax 32 13036901 PAT    See Answer
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