What is the annual ocf for this project

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Reference no: EM131535301

McGilla Golf has decided to sell a new line of golf clubs. The clubs will sell for $761 per set and have a variable cost of $397 per set. The company has spent $17581 for a marketing study that determined the company will sell 5278 sets per year for seven years. The marketing study also determined that the company will lose sales of 925 sets of its high-priced clubs. The high-priced clubs sell at $1031 and have variable costs of $724. The company will also increase sales of its cheap clubs by 1169 sets. The cheap clubs sell for $439 and have variable costs of $243 per set. The fixed costs each year will be $904644. The company has also spent $118666 on research and development for the new clubs. The plant and equipment required will cost $2869304 and will be depreciated on a straight-line basis. The new clubs will also require an increase in net working capital of $129139 that will be returned at the end of the project. The tax rate is 31 percent, and the cost of capital is 11 percent. What is the annual OCF for this project?

Reference no: EM131535301

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