Aylmer$-$in$-$You $($AIY$)$ Inc. projects unit sales for a new opera tenor emulation implant as follows:

Year Unit Sales

$1117,000$

$2133,000$

$3144,000$

$4166,000$

$5105,000$

Production of the implants will require $$876,000$ in net working capital to start and additional net working capital investments each year equal to $20\%$ of the projected sales increase for the following year. $($Because sales are expected to fall in Year $5,$ there is no NWC cash flow occurring for Year $4.)$ Total fixed costs are $$202,000$ per year, variable production costs are $$266$ per unit, and the units are priced at $$400$ each. The equipment needed to begin production has an installed cost of $$30\mathrm{.}0$ million. Because the implants are intended for professional singers, this equipment is considered industrial machinery and thus falls into Class $8$ for tax purposes $(20\%).$ In five years, this equipment can be sold for about $25\%$ of its acquisition cost. AIY is in the $40\%$ marginal tax bracket and has a required return on all its projects of $24\%.$

Based on these preliminary project estimates, what is the NPV of the project? What is the IRR? $($Enter your answer in dollars, not in millions of dollars, i$.$e$.1,234,567.$ Do not round your intermediate calculations. Round the final answers to $2$ decimal places. Omit $ sign in your response.$)$ Problem $10-50$ Project Evaluation $($LO$2)$

Aylmer$-$in$-$You $($AIY$)$ Inc. projects unit sales for a new opera tenor emulation implant as follows:

Production of the implants will require $$876,000$ in net working capital to start and additional net working capital investments each

year equal to $20\%$ of the projected sales increase for the following year. $($Because sales are expected to fall in Year $5,$ there is no NWC

cash flow occurring for Year $4.)$ Total fixed costs are $$202,000$ per year, variable production costs are $$266$ per unit, and the units are

priced at $$400$ each. The equipment needed to begin production has an installed cost of $$30\mathrm{.}0$ million. Because the implants are

intended for professional singers, this equipment is considered industrial machinery and thus falls into Class $8$ for tax purposes $(20\%).$

In five years, this equipment can be sold for about $25\%$ of its acquisition cost. AlY is in the $40\%$ marginal tax bracket and has a required

return on all its projects of $24\%.$

Based on these preliminary project estimates, what is the NPV of the project? What is the IRR? $($Enter your answer in dollars, not in

millions of dollars, i$.$e$.1,234,567.$ Do not round your intermediate calculations. Round the final answers to $2$ decimal places. Omit

$ sign in your response.$)$

$