Question: Please, try not to use Excel or any Computer to solve this problem. Use formulas, math and written explanation to solve the problem. Make sure
Please, try not to use Excel or any Computer to solve this problem. Use formulas, math and written explanation to solve the problem. Make sure the answers are well written, clear, and easy to understand. Thanks.

Aday Acoustics, Inc., projects unit sales for a new 7-octave voice emulation implant as follows: Year Unit Sales 74,700 80,100 85,800 83,000 69,900 Production of the implants will require $1,490,000 in net working capital to start and additional networking capital investments each year equal to 20 percent of the projected sales increase for the following year. Total fixed costs are $3,850,000 per year, variable production costs are $144 per unit, and the units are priced at $326 each. The equipment needed to begin production has an installed cost of $18,600,000. Because the implants are intended for professional singers, this equipment is considered industrial machinery and thus qualifies as 7-year MACRS property. In five years, this equipment can be sold for about 25 percent of its acquisition cost. The company is in the 24 percent marginal tax bracket and has a required return on all its projects of 18 percent. MACRS schedule. What is the NPV of the project? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) What is the IRR of the project? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) NPV IRR
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
