Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Cannot figure this question out. Please help to solve it! I know IRR = 36.83, but do not know how to get Net Present Value.

Cannot figure this question out. Please help to solve it! I know IRR = 36.83, but do not know how to get Net Present Value.image text in transcribed

Aday Acoustics, Inc., projects unit sales for a new 7-octave voice emulation implant as follows: Year Unit Sales 1 73,200 78,600 83,800 81,500 67,900 2 4 5 Production of the implants will require $1,440,000 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 variable production costs are $139 per unit, and the units are priced at $321 each. The equipment needed to begin production has an installed cost of $18,100,000. Because the implants are intended for professional singers, this equipment is considered industrial machinery and thus qualifies as 7-year MACRS property. In five years, this equipment can be sold for about 15 percent of its acquisition cost. The company is in the 24 percent marginal tax bracket and has a required return on all its projects of 18 percent. MACRS schedule. $3,600,000 per year, What is the NPV of the project? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) What is the IRR of the project? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) NPV 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

Step: 3

blur-text-image

Ace Your Homework with AI

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

Get Started

Students also viewed these Finance questions