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McGilla Golf has decided to sell a new line of golf clubs. The clubs will sell for $760 per set and have a variable cost of $382 per set. The company has spent $191425 for a marketing study that determined the company will sell 55749 sets per year for seven years. The marketing study also determined that the company will lose sales of 9740 sets of its high-priced clubs. The high-priced clubs sell at $1135 and have variable costs of $664. The company will also increase sales of its cheap clubs by 11928 sets. The cheap clubs sell for $417 and have variable costs of $204 per set. The fixed costs each year will be $9125921. The company has also spent $1033124 on research and development for the new clubs. The plant and equipment required will cost $28253393 and will be depreciated on a straight-line basis. The new clubs will also require an increase in net working capital of $1312132 that will be returned at the end of the project. The tax rate is 30 percent, and the cost of capital is 12 percent. What is the annual OCF for this project?

Financial Management, Finance

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