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

• The company has spent $150,000 for a marketing study to evaluate the project. The study shows that the company will sell 75,000 units per year for 6 years. In addition, the company will lose sales of 12,000 units per year of its high priced voice emulation implant.

• The variable production costs for new voice emulation implant are $260 per unit, and the units are priced at $380 each. Total fixed costs are $600,000 per year.

• The high-priced voice emulation implant has production costs are $440 per unit, and the units are priced at $640 each.

• Production of the implants will require $2,000,000 in net working capital to start, and that amount will be returned at the end of the project.

• The equipment will cost $20,000,000, and will be depreciated on a straight- line basis to $8,000,000 in 6 years. At the end of 6th year, the equipment can be scrapped for $7,000,000

• AAI is in the 20 percent marginal tax bracket.

• The cost of capital is 12% per year.

• The board of directors of AAI decided to only invest in those projects with

  less than 4.5 years of payback period.

  What is the NPV, IRR and payback period of this project? Should we accept or reject this project?