Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Aria Acoustics, Inc. (AAI), projects unit sales for a new seven-octave volce emulation implant as follows: Year 1 UN Unit Sales 74,400 87,400 106,750 99,100

image text in transcribed
Aria Acoustics, Inc. (AAI), projects unit sales for a new seven-octave volce emulation implant as follows: Year 1 UN Unit Sales 74,400 87,400 106,750 99,100 68,000 Production of the implants will require $1,850,000 in net working capital to start and additional networking capital investments each year equal to 10 percent of the projected sales increase for the following year. Total fixed costs are $3,900,000 per year, variable production costs are $262 per unit, and the units are priced at $396 each. The equipment needed to begin production has an installed cost of $17,900,000. Because the implants are intended for professional singers, this equipment is considered industrial machinery and thus qualifies as seven-year MACRS property. In five years, this equipment can be sold for about 15 percent of its acquisition cost. The tax rate is 22 percent and the required return is 13 percent. MACRS schedule a. What is the NPV of the project? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g. 32.16.) b. What is the IRR? (Do not round Intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. NPV b. IRR %

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Foundations Of Financial Management

Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen

17th Edition

126001391X, 978-1260013917

More Books

Students also viewed these Finance questions

Question

outline the main considerations in the development of purpose;

Answered: 1 week ago