Aria Acoustics, Incorporated (AAI), projects unit sales for a new 7-octave voice emulationimplant as follows:YearUnit Sales174,400234579,80085,40082,70069,500Production of the implants will require $1,480,000 in net working capital to start andadditional net working capital investments each year equal to 15 percent of theprojected sales increase for the following year. Total fixed costs are $3,800,000 per year,variable production costs are $143 per unit, and the units are priced at $325 each. Theequipment needed to begin production has an installed cost of $18,500,000. Becausethe implants are intended for professional singers, this equipment is consideredindustrial machinery and thus qualifies as 7-year MACRS property. In five years, thisequipment can be sold for about 20 percent of its acquisition cost. The tax rate is 23percent and the required return is 17 percent. (MACRS schedule)a. What is the NPV of the project? (Do not round intermediate calculations and roundyour answer to 2 decimal places, e.g., 32.16.)b. What is the IRR of the project? (Do not round intermediate calculations and enteryour answer as a percent rounded to 2 decimal places, e.g., 32.16.)a. NPVb. IRR36.27

Name: Aria Acoustics, Incorporated (AAI), projects unit sales for a new 7-o
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Description: Aria Acoustics, Incorporated (AAI), projects unit sales for a new 7-octave voice emulationimplant as follows:YearUnit Sales174,400234579,80085,40082,70069,500Production of the implants will require $1,480,000 in net working capital to start andaddit

The net present value is the amount that an investment will profit or lose in current dollars. It…

Business

Finance

a. What is the NPV of the project? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. 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.)

a. What is the NPV of the project? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. 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.)

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 21P

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