Project Evaluation Aguilera Acoustics (AA) projects unit sales for a new seven-octave voice emulation implant as follows:

Year Unit sales 1 85,000 2 98,000 3 106,000 4 114,000 5 93,000 Production of the implants will require €1,500,000 in net working capital to start, and additional net working capital investments each year equal to 15 per cent of the projected sales for the following year. Total fixed costs are €900,000 per year, variable production costs are €240 per unit, and the units are priced at €325 each. The equipment needed to begin production has an installed cost of

€21,000,000. Because the implants are intended for professional singers, this equipment is considered industrial machinery, and is thus depreciated by the reducing-balance method at 20 per cent per annum. In five years this equipment can be sold for about 20 per cent of its acquisition cost. AA is in the 35 per cent marginal tax bracket, and has a required return on all its projects of 18 per cent.

Based on these preliminary project estimates, what is the NPV of the project? What is the IRR?