Problem $9-29$ Project Evaluation $[$LO $2]$

Aria Acoustics, Incorporated $($AAI$),$ projects unit sales for a new seven$-$octave voice emulation implant as follows:

$\backslash$table$[[$Year$,$Unit Sales$],[1,73,400],[2,86,400],[3,105,500],[4,97,600],[5,67,500]]$

Production of the implants will require $$1,600,000$ in net working capital to start and additional net working capital investments each year equal to $15$ percent of the projected sales increase for the following year. Total fixed costs are $$3,400,000$ per year, variable production costs are $$257$ per unit, and the units are priced at $$381$ each. The equipment needed to begin production has an installed cost of $$16,900,000.$ 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 $20$ percent of its acquisition cost. The tax rate is $22$ percent and the required return is $14$ percent. MACRS schedule

a$.$ What is the NPV of the project?

Note: Do not round intermediate calculations and round your answer to $2$ decimal places, e$.$g$.,32\mathrm{.}16.$

b$.$ What is the IRR?

Note: Do not round intermediate calculations and enter your answer as a percent rounded to $2$ decimal places, e$.$g$.,32\mathrm{.}16.$

$\backslash$table$[[$a$.$ NPV$,,],[$b$.$ IRR,,$]]$