Please do not give image format Aylmer-in-You (AIY) Inc. projects unit sales for a new opera tenor emulation implant as follows:Year135NPVIRRUnit Sales101, 000115,000125,000145,00090, 000Production of the implants will require $753,000 in net working capital to start and additional net working capital investments eachyear equal to 15% of the projected sales increase for the following year. (Because sales are expected to fall in Year 5, there is no NWCcash flow occurring for Year 4.) Total fixed costs are $177,000 per year, variable production costs are $309 per unit, and the units arepriced at $360 each. The equipment needed to begin production has an installed cost of $10.0 million. Because the implants areintended for professional singers, this equipment is considered industrial machinery and thus falls into Class 8 for tax purposes (20%).In five years, this equipment can be sold for about 20% of its acquisition cost. AlY is in the 40% marginal tax bracket and has arequired return on all its projects of 18%.Based on these preliminary project estimates, what is the NPV of the project? What is the IRR? (Enter your answer in dollars, not inmillions of dollars, i.e. 1,234,567. Do not round your intermediate calculations. Round the final answers to 2 decimal places. Omit$ sign in your response.)$

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Answered: Aylmer-in-You (AIY) Inc. projects unit…

Aylmer-in-You (AIY) Inc. projects unit sales for a new op Year 1 2345 Unit Sales 101, 000 115,000 125, 000 145, 000 90, 000

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 19P

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