Question below! Please help :)

Question

anonymous · Answer

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.

anonymous · Answer

@amistre64

amistre64 · Answer

sorry, but that just reads as gibberish to me at the moment.

amistre64 · Answer

what does NPV mean?

amistre64 · Answer

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

anonymous · Answer

Thanks! I still don't fully understand, but thanks for trying.