Aguilera Acoustics, Inc. $($AAI$),$ projects unit sales for a

new seven$-$octave voice emulation implant as follows:

Year Unit Sales

$1$

$2$

$3$

$4$

$5$

$93,000$

$105,000$

$128,000$

$134,000$

$87,000$

Production of the implants will require $$1,800,000$ in net working capital to start

and additional net working capital investments each year equal to $15$ percent of the

projected sales increase for the following year. Total fi xed costs are $$1,200,000$ per

year, variable production costs are $$265$ per unit, and the units are priced at $$380$

each. The equipment needed to begin production has an installed cost of

$$24,000,000.$ Because the implants are intended for professional singers, this

equipment is considered industrial machinery and thus qualifi es as seven$-$year

MACRS property. In fi ve 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 required

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?