Reference no: EM132031772

McGilla Golf has decided to sell a new line of golf clubs. The clubs will sell for $769 per set and have a variable cost of $364 per set. The company has spent $135127 for a marketing study that determined the company will sell 5489 sets per year for seven years. The marketing study also determined that the company will lose sales of 972 sets of its high-priced clubs. The high-priced clubs sell at $1171 and have variable costs of $729. The company will also increase sales of its cheap clubs by 1149 sets. The cheap clubs sell for $420 and have variable costs of $258 per set. The fixed costs each year will be $861683. The company has also spent $119860 on research and development for the new clubs. The plant and equipment required will cost $2856235 and will be depreciated on a straight-line basis. The new clubs will also require an increase in net working capital of $129270 that will be returned at the end of the project. The tax rate is 29 percent, and the cost of capital is 7 percent. What is the sensitivity of the NPV to changes in the quantity of the new clubs sold? [Hint: Think of this as, "How much will NPV change if I sell one more set of new clubs each year?"] (Do not round intermediate calculations and round your final answer to the nearest dollar. Omit the "$" sign and commas in your response. For example, $12,345.6789 should be entered as 12346.)