Production of the implants will require $2,050,000 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 $4,300,000 per year, variable production costs are $266 per unit, and the units are priced at $408 each. The equipment needed to begin production has an installed cost of $18,700,000. 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. The tax rate is 21 percent and the required return is 17 percent. Year 5-year 1 2 Year 1 Unit Sales 75,200 88,200 107,750 100.300 68,400 Property Class 3-year 33.33% 44.45% 14.81% 7.41% 3 2 3 4 20.00% 32.00% 19.20% 11.52% 11.52% 5.76% 5 4 7-year 14.29% 24.49% 17.49% 12.49% 8.93% 8.92% 8.93% 4.46% 5 6 7 8 Total 100.00% 100.00% 100.00% 1. What is the NPV of this project? What is the project's IRR? And what is the payback period ? (45 points/question) 2. You feel that both sales and fixed costs are accurate to +/-5 percent. What are the NPVs of this project for both the best and the worst-case scenarios? (55 Points)