The projected unit sales are as below. 1 2 3 4 5 Unit sales 75000 88000 120000 95000 60000 To produce the headphones, the initial net working capital of $2,000,000 is required and additional net working capital is also required each year, which is 20% of the projected sales increase for the following year. The net working capital will be recovered at the end of a project. In addition, the initial installation cost of the machine for production is $18,000,000. The machine will be depreciated for tax purposes using straight-line depreciation with the useful life of 6 years. Also, costs and unit price are as below. Fixed cost $2,800,000 per year Variable cost $295 per unit Price $420 per unit In five years, the machine can be sold for about 30% of its acquisition cost. The tax rate is 30% and the required rate of return is 15%. 

Required 

(a) What is the NPV of the project? Explain and defend your processes, answers, and calculations clearly. 

(b) Assuming that the project can be repeated indefinitely, what is the NPV∞ of the project?