replacement machine will cost GHQ: 3,200,000. Pilot will need to purchase this machine regardless of what Choice it makes today. The corporate tax rate is 40 percent and the appropriate discount rate is 8 percent. The company is assumed to earn sufficient revenues to generate tax shields from depreciation. Should Pilot Plus Pens replace the old machine now or at the end of five years? Question 12 Aguilera Acoustics, Inc. (AAI), projects unit sales for a new seven-octave voice emulation implant as follows: Year 83,000 92,000 104,000 98,000 84,000 Production of the implants will require GH 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 GH 2,400,000 per year, variable production costs are GH 190 per unit, and the units are priced at GH 345 each. The equipment needed to begin production has an installed cost of GH 23,000,000. Because the implants are intended for professional singers, this equipment depreciated using the straight-line basis. In five years, this equipment can be sold for about 20 percent of its acquisition cost. AAI is in the 35 percent marginal tax bracket and has a required return on all its projects of 18 percent. Based on these Dreliminarv Droiect estimates, what is the NPV of the Droiect? What is the IRR