Black Hills Acoustics, Inc. (BHAI), project unit sales for a new seven-octave voice emulation implant as follows:

Year	Unit Sales
1	84,000
2	98,000
3	113,000
4	106,000
5	79,000

Production of the implants will require $1,500,000 in net working capital to start and additional net working capital investments each year equal to 15 percent of the projected sales increase for the following year. Total fixed costs are $3,400,000 per year, variable production costs are $262 per unit, and the units are priced at $395 each. The equipment needed to begin production has an installed cost of $17,000,000. 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 20 percent of its acquisition cost. BHAI is in the 35 percent marginal tax bracket and has a required return on all its projects of 18 percent. (16 points)

	Property Class
Ownership Year	3-Year		5-Year		7-Year
1	33.33%		20.00%		14.29%
2	44.45	32.00		24.49
3	14.81	19.20		17.49
4	7.41	11.52		12.49
5		11.52		8.93
6		5.76		8.92
7				8.93
8				4.46

a. Based on these preliminary project estimates, what is the NPV of the project? (8 points)

b. What is the IRR? (8 points)