Aday Acoustics, Inc., projects unit sales for a new 7-octave
voice emulation implant as follows:
Year
Unit Sales
1
72,600
2
78,000
3
83,000
4
80,900
5
67,100
Production...
60.1K
Verified Solution
Link Copied!
Question
Finance
Aday Acoustics, Inc., projects unit sales for a new 7-octavevoice emulation implant as follows:
Year
Unit Sales
1
72,600
2
78,000
3
83,000
4
80,900
5
67,100
Production of the implants will require $1,420,000 in networking capital to start and additional net working capitalinvestments each year equal to 15 percent of the projected salesincrease for the following year. Total fixed costs are $3,500,000per year, variable production costs are $137 per unit, and theunits are priced at $319 each. The equipment needed to beginproduction has an installed cost of $17,900,000. Because theimplants are intended for professional singers, this equipment isconsidered industrial machinery and thus qualifies as 7-year MACRSproperty. In five years, this equipment can be sold for about 20percent of its acquisition cost. The company is in the 22 percentmarginal tax bracket and has a required return on all its projectsof 16 percent. MACRS schedule.
 Â
What is the NPV of the project? (Do not roundintermediate calculations and round your answer to 2 decimalplaces, e.g., 32.16.)
What is the IRR of the project? (Do not roundintermediate calculations and enter your answer as a percentrounded to 2 decimal places, e.g., 32.16.)
Answer & Explanation
Solved by verified expert
4.3 Ratings (758 Votes)
Please see the table below Please be guided by the secondcolumn
See Answer
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
