Aria Acoustics, Inc. (AAI), projects

unit sales for a new seven-octave voice emulation implant as

follows:

Unit Sales

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).)

$   

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