Aria Acoustics, Inc. (AAI), projects unit sales for a new seven-octave voice emulation implant as follows:

Year		Unit Sales
1			91,000
2			104,000
3			118,000
4			113,000
5			94,000

Production of the implants will require $1,700,000 in net working capital to start and additional net working capital investments each year equal to 10 percent of the projected sales increase for the following year. Total fixed costs are $1,600,000 per year, variable production costs are $315 per unit, and the units are priced at $430 each. The equipment needed to begin production has an installed cost of $22,000,000. 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. AAI is in the 30 percent marginal tax bracket and has a required return on all its projects of 17 percent. Table 8.3.

What is the NPV of the project? (Do not round intermediate calculations and round your final answer to 2 decimal places (e.g., 32.16).)

NPV

$

What is the IRR? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places (e.g., 32.16).)

IRR

											IRR=	24.14%
	Initial Outlay							Cashflow	PV			PV
		$1,700,000	Net working capital				0	$(23,700,000)	$(23,700,000)			$(23,700,000)
		$22,000,000	Equipment				1	$6,589,640	$5,632,171			$5,308,096
		$23,700,000					2	$8,266,340	$6,038,673			$5,363,736
							3	$9,533,340	$5,952,337			$4,982,833
		Unit sales	Unit cost	Unit price			4	$8,800,840	$4,696,569			$3,705,377
	1	91,000	$315	$430			5	$12,796,760	$5,836,745			$4,339,957
	2	104,000						NPV	$4,456,494.77			$(0)
	3	118,000
	4	113,000
	5	94,000
	Sales - Fixed Cost - Variable Cost				tax	30%
	1	$8,865,000			rate of return	17%
	2	$10,360,000
	3	$11,970,000
	4	$11,395,000
	5	$9,210,000
	Additional Working Capital*
	1	$559,000
	2	$602,000
	3	$(215,000)
	4	$(817,000)
		*if negative, we don't add additional working capital
	Depreciation Schedule
	1	14.29%	$3,143,800
	2	24.49%	$5,387,800
	3	17.49%	$3,847,800
	4	12.49%	$2,747,800
	5	8.93%	$1,964,600
	6	8.92%	$1,962,400
	7	8.93%	$1,964,600
	8	4.46%	$981,200
	Equipment Salvage		3,300,000 My answer is not correct???

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