Consider two mutually exclusive new product launch projects


Consider two mutually exclusive new product launch projects that Nagano Golf is considering. Assume the discount rate for Nagano Golf is 16 percent. (Do not round intermediate calculations. Round your "PI" answers to 3 decimal places (e.g., 32.161) and other answers to 2 decimal places. (e.g., 32.16)) Project A: Nagano NP-30. Professional clubs that will take an initial investment of $740,000 at time 0. Next five years (Years 1–5) of sales will generate a consistent cash flow of $340,000 per year. Introduction of new product at Year 6 will terminate further cash flows from this project. Project B: Nagano NX-20. High-end amateur clubs that will take an initial investment of $970,000 at Time 0. Cash flow at Year 1 is $290,000. In each subsequent year cash flow will grow at 10 percent per year. Introduction of new product at Year 6 will terminate further cash flows from this project. Year NP-30 NX-20 0 –$ 740,000 –$ 970,000 1 340,000 290,000 2 340,000 319,000 3 340,000 350,900 4 340,000 385,990 5 340,000 424,589 Complete the following table:

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Financial Management: Consider two mutually exclusive new product launch projects
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