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guilera Acoustics, Inc. (AAI) projects unit sales for a new seven-octave voice emulation implant as follows:                         Year 1 Year 2 Year 3 Year 4 Year 5   Unit sales                  81,000                94,000              108,000              103,000                84,000

guilera Acoustics, Inc. (AAI) projects unit sales for a new seven-octave voice emulation implant as follows:                         Year 1 Year 2 Year 3 Year 4 Year 5   Unit sales                  81,000                94,000              108,000              103,000                84,000

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Aguilera Acoustics, Inc. (AAI) projects unit sales for a new seven-octave voice emulation implant as follows:    
               
    Year 1 Year 2 Year 3 Year 4 Year 5  
Unit sales                  81,000                94,000              108,000              103,000                84,000  
               
Production of the implants will require $1,600,000 investment in working capital. The units are priced at $380 each, cost of goods sold (COGS) is $265 per unit, and selling, general and administration (SGA) expenses are $1,500,000 per year. The equipment needed to begin production has an installed cost of $21,000,000 and will be depreciated straight-line to zero. In five years, this equipment can be sold for about 10% of its original cost. AAI is in the 35 percent marginal tax bracket and has a required return or cost of capital on all its projects of 18 percent. Based on these preliminary project estimates: 
a) What is the project's NPV?            
b) What is the project's IRR?            
c) What is the project's MIRR?            
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