## (Solution Download) Aria Acoustics, Inc. (AAI), projects unit sales for a new seven-octave voice emulation implant as fo

 Aria Acoustics, Inc. (AAI), projects unit sales for a new seven-octave voice emulation implant as follows:

 Year Unit Sales 1 91,000 2 104,000 3 118,000 4 113,000 5 94,000

 Production of the implants will require \$1,700,000 in net working capital to start and additional net working capital investments each year equal to 10 percent of the projected sales increase for the following year. Total fixed costs are \$1,600,000 per year, variable production costs are \$315 per unit, and the units are priced at \$430 each. The equipment needed to begin production has an installed cost of \$22,000,000. 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 15 percent of its acquisition cost. AAI is in the 30 percent marginal tax bracket and has a required return on all its projects of 17 percent. Table 8.3.

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

 NPV \$

 What is the IRR? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places (e.g., 32.16).)

IRR

 IRR= 24.14% Initial Outlay Cashflow PV PV \$1,700,000 Net working capital 0 \$(23,700,000) \$(23,700,000) \$(23,700,000) \$22,000,000 Equipment 1 \$6,589,640 \$5,632,171 \$5,308,096 \$23,700,000 2 \$8,266,340 \$6,038,673 \$5,363,736 3 \$9,533,340 \$5,952,337 \$4,982,833 Unit sales Unit cost Unit price 4 \$8,800,840 \$4,696,569 \$3,705,377 1 91,000 \$315 \$430 5 \$12,796,760 \$5,836,745 \$4,339,957 2 104,000 NPV \$4,456,494.77 \$(0) 3 118,000 4 113,000 5 94,000 Sales - Fixed Cost - Variable Cost tax 30% 1 \$8,865,000 rate of return 17% 2 \$10,360,000 3 \$11,970,000 4 \$11,395,000 5 \$9,210,000 Additional Working Capital* 1 \$559,000 2 \$602,000 3 \$(215,000) 4 \$(817,000) *if negative, we don't add additional working capital Depreciation Schedule 1 14.29% \$3,143,800 2 24.49% \$5,387,800 3 17.49% \$3,847,800 4 12.49% \$2,747,800 5 8.93% \$1,964,600 6 8.92% \$1,962,400 7 8.93% \$1,964,600 8 4.46% \$981,200 Equipment Salvage 3,300,000 My answer is not correct???

%

Solution details:
STATUS
QUALITY
Approved

This question was answered on: Dec 08, 2020

Solution~000652147654094.zip (25.37 KB)

This attachment is locked

We have a ready expert answer for this paper which you can use for in-depth understanding, research editing or paraphrasing. You can buy it or order for a fresh, original and plagiarism-free solution (Deadline assured. Flexible pricing. TurnItIn Report provided)

STATUS

QUALITY

Approved

Dec 08, 2020

EXPERT

Tutor