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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 $240 of revenue at a cost of $160. This past year, they sold 1,300 putters and they expect this number to grow each year by 10.5% until this model becomes obselete after 9 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 $115,000 and has the capacity to produce all the putters you want to sell per year at a unit cost of $114. There is no increased working capital need due to this new technology, and no value of the machine/technology after 9 years. What is the NPV of investing in the new technology? Ignore taxes and assume a discount rate of 9.5%. (All previous answers to similar problem are WRONG - pls show calculations)

Financial Management, Finance

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