Marginal tax bracket and has a required return

Reference no: EM131350720

Aria Acoustics, Inc., (AAI) projects unit sales for a new seven-octave voice emulation implant as follows: Year Unit Sales 1 117,000 2 136,000 3 124,000 4 107,000 5 93,000 Production of the implants will require $2,450,000 in net working capital to start and additional net working capital investments each year equal to 25 percent of the projected sales increase for the following year. Total fixed costs are $1,530,000 per year, variable production costs are $243 per unit, and the units are priced at $363 each. The equipment needed to begin production has an installed cost of $32,000,000. Because the implants are intended for professional singers, this equipment is considered industrial machinery and thus qualifies as seven-year MACRS (MACRS Table) property. In five years, this equipment can be sold for about 20 percent of its acquisition cost. AAI is in the 40 percent marginal tax bracket and has a required return on all its projects of 16 percent. What is the NPV of the project? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Net present value $ 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.) Internal rate of return %

Reference no: EM131350720

Questions Cloud

Define the problem in the scenario that you have chosen : Define the problem in the scenario that you have chosen. Analyze the problem in the scenario. Generate options for solving the problem in the scenario

Determine the atmospheric temperature gradient : At a height z1 the pressure and temperature are 975 mBar and 11.5 °C. Determine the atmospheric temperature gradient, and the height z1.

Discuss about the software information assurance : CS661:You will select a real organization or create a hypothetical organization and apply your research to develop the Information Security Assurance Implementation Plan that would be appropriate for the organization and fulfill a need that the or..

Describe the metal band straight line stitch : Describe the metal band "Straight Line Stitch". Use your own words to introduce the band, the story behind, and their style.

Marginal tax bracket and has a required return : Aria Acoustics, Inc., (AAI) projects unit sales for a new seven-octave voice emulation implant as follows: Production of the implants will require $2,450,000 in net working capital to start and additional net working capital investments each year equ..

Fair dealing and the possibility of an implied contract term : Explain the distinction between the court's discussion of the covenant of good faith and fair dealing and the possibility of an implied contract term.

Evaluate the current forces driving change : In a written paper of 1,250-1,500 words, evaluate the current forces driving change in your field or industry. As a leader, or considering the role of a leader, assess your organization and evaluate how well it is responding to the forces, and ide..

How might an employer create an implied in fact term : How might an employer create an "implied-in-fact term" and how could a failure to follow such policies when terminating an employee create a breach of the contract?

What is the ultimate result of this decision : Was Daru's decision to let The Arab choose his own destiny a heroic or cowardly decision? What is the ultimate result of this decision? What lesson or theme do you think Camus is trying to communicate through this encounter

User Account

All Pages