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Aday Acoustics, Inc., projects unit sales for a new 7-octave voice emulation implant as follows: Production of the implants will require $1,430,000 in net working
Aday Acoustics, Inc., projects unit sales for a new 7-octave voice emulation implant as follows: Production of the implants will require $1,430,000 in net working capital to start and additional net working capital investments each year equal to 20 percent of the projected sales increase for the following year. Total fixed costs are $3,550,000 per year, variable production costs are $138 per unit, and the units are priced at $320 each. The equipment needed to begin production has an installed cost of $18,000,000. Because the implants are intended for professional singers, this equipment is considered industrial machinery and thus qualifies as 7-year MACRS property. In five years, this equipment can be sold for about 25 percent of its acquisition cost. The company is in the 23 percent marginal tax bracket and has a required return on all its projects of 17 percent. MACRS schedule. What is the NPV of the project? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) What is the IRR of the project? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Answer is complete but not entirely correct
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