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anonymous

  • one year ago

Question below! Please help :)

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  1. anonymous
    • one year ago
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    Silver Bear Golf (SBG) is a manufacturer of top quality golf clubs with a specialty of putters. Currently, each putter they sell brings in $280 of revenue at a cost of $200. This past year, they sold 900 putters and they expect this number to grow each year by 13.5% until this model becomes obselete after 15 more years. The foreman at the SBG factory recently brought to your attention a new technology that could lower the cost of production. This technology requires an upfront fixed investment of $205,000 and has the capacity to produce all the putters you want to sell per year at a unit cost of $160. There is no increased working capital need due to this new technology, and no value of the machine/technology after 15 years. What is the NPV of investing in the new technology? Ignore taxes and assume a discount rate of 7.0%. (Hint: Think incrementally; the difference between the world without and with this new technology! Also, ignoring taxes will be a big help if you think right.

  2. anonymous
    • one year ago
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    @amistre64

  3. amistre64
    • one year ago
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    sorry, but that just reads as gibberish to me at the moment.

  4. amistre64
    • one year ago
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    what does NPV mean?

  5. amistre64
    • one year ago
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    units sold over 15 years would be: N = 900(1+r)^(15) 200N is the total cost, 280N is the total revenue .. 80N is the total profit without the tech

  6. anonymous
    • one year ago
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    Thanks! I still don't fully understand, but thanks for trying.

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