Reference no: EM131916752

McGilla Golf has decided to sell a new line of golf clubs. The clubs will sell for $819 per set and have a variable cost of $416 per set. The company has spent $191650 for a marketing study that determined the company will sell 5547 sets per year for seven years. The marketing study also determined that the company will lose sales of 963 sets of its high-priced clubs. The high-priced clubs sell at $1017 and have variable costs of $697. The company will also increase sales of its cheap clubs by 1044 sets. The cheap clubs sell for $454 and have variable costs of $243 per set. The fixed costs each year will be $908071. The company has also spent $115513 on research and development for the new clubs. The plant and equipment required will cost $2862649 and will be depreciated on a straight-line basis. The new clubs will also require an increase in net working capital of $133135 that will be returned at the end of the project. The tax rate is 31 percent, and the cost of capital is 9 percent. What is the sensitivity of the NPV to changes in the price of the new clubs?