Aria Acoustics, Inc. ( AAI ) , projects unit sales for a new seven - octave voice
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Question:
Aria Acoustics, Inc. AAI projects unit sales for a new sevenoctave voice emulation implant as follows:
Year Unit Sales
Production of the implants will require $ in net working capital to start and additional net working capital investments each year equal to percent of the projected sales increase for the following year. Total fixed costs are $ per year, variable production costs are $ per unit, and the units are priced at $ each. The equipment needed to begin production has an installed cost of $ Because the implants are intended for professional singers, this equipment is considered industrial machinery and thus qualifies as sevenyear MACRS property. In five years, this equipment can be sold for about percent of its acquisition cost. AAI is in the percent marginal tax bracket and has a required return on all its projects of percent. MACRS schedule
What is the NPV of the project?
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