Aria Acoustics, Inc.

$($

AAI

$)$

$,$

$$projects unit sales for a new seven

$-$

octave voice emulation implant as follows:

$$

Year Unit Sales

$1$

$7$

$8$

$,$

$0$

$0$

$0$

$$

$2$

$9$

$1$

$,$

$0$

$0$

$0$

$$

$3$

$1$

$0$

$5$

$,$

$0$

$0$

$0$

$$

$4$

$1$

$0$

$0$

$,$

$0$

$0$

$0$

$$

$5$

$8$

$1$

$,$

$0$

$0$

$0$

$$

$$

Production of the implants will require $

$1$

$,$

$5$

$7$

$0$

$,$

$0$

$0$

$0$

$$in net working capital to start and additional net working capital investments each year equal to

$1$

$0$

$$percent of the projected sales increase for the following year. Total fixed costs are $

$1$

$,$

$4$

$7$

$0$

$,$

$0$

$0$

$0$

$$per year, variable production costs are $

$2$

$5$

$0$

$$per unit, and the units are priced at $

$3$

$6$

$5$

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

$2$

$0$

$,$

$7$

$0$

$0$

$,$

$0$

$0$

$0$

$.$

$$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

$1$

$5$

$$percent of its acquisition cost. The tax rate is

$2$

$3$

$$percent and the required return on the project is

$1$

$7$

$$percent$.$ Refer to Table

$8$

$.$

$3$

$.$

$$

a

$.$

$$What is the NPV of the project?

$($

Do not round intermediate calculations and round your answer to

$2$

$$decimal places, e

$.$

g

$.$

$,$

$3$

$2$

$.$

$1$

$6$

$.$

$)$

b

$.$

$$What is the IRR?

$($

Do not round intermediate calculations and enter your answer as a percent rounded to

$2$

$$decimal places, e

$.$

g

$.$

$,$

$3$

$2$

$.$

$1$

$6$

$.$

$)\text{'}$