32 Project Evaluation [LO1] Aria Acoustics, Inc. (AAI), projects unit sales for a new seven-octave voice Page 347 emulation implant as follows: Year Unit Sales 84,000 98,000 2 113,000 3 4 106,000 79,000 5 Production of the implants will require $1,500,000 in net additional net working capital investments each year equal to 15 percent of the projected sales increase for the following year. Total fixed costs $3,400,000 per year, variable production working capital to start and are $265 per unit, and the units are priced at COsts are $395 each. The equipment needed to begin production has an installed cost of $17,000,000 Because the implants 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 20 percent of its acquisition cost. AAI is in the 35 percent marginal tax bracket and has a return on all its projects of 18 percent. Based on these preliminary project estimates, what is the NPV of the project? What is the IRR? are intended for required