Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Project Evaluation. Aguilera Acoustics, Inc. (AAl), projects unit sales for a new seven-octave voice emulation implant as follows: Year Unit Sales 87,500 105,000 119,000 108,000

image text in transcribedimage text in transcribed

Project Evaluation. Aguilera Acoustics, Inc. (AAl), projects unit sales for a new seven-octave voice emulation implant as follows: Year Unit Sales 87,500 105,000 119,000 108,000 92,000 2 3 5 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 $1,450,000 per year, variable production costs are $230 per unit, and the units are priced at $355 each. The equipment needed to begin production has an installed cost of $24,000,000. 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. AAl is in the 35 percent marginal tax bracket and has a required return on all its projects of 18 percent. Based on these preliminary project estimates, what is the NPV of the project? What is the 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

Recommended Textbook for

International Financial Management

Authors: Jeff Madura, Roland Fox

5th Edition

1473770505, 978-1473770508

More Books

Students also viewed these Finance questions

Question

How would you handle the difficulty level of the texts?

Answered: 1 week ago

Question

3. Describe the process of a union drive and election.

Answered: 1 week ago

Question

6. What actions might make employers lose elections?

Answered: 1 week ago