Samsung Inc. estimate unit sales for a new music amplifier as follows: 75,000; 86,000; 95,000; 92,000;...

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Samsung Inc. estimate unit sales for a new music amplifier asfollows: 75,000; 86,000; 95,000; 92,000; and 73,000 for year 1through year 5, respectively.
Production of the implants will require $1,600,000 in networking capital to start and additional net working capitalinvestments each year equal to 18 percent of the projected salesincrease for the following year. Total fixed costs are $1,800,000per year, variable production costs are $250 per unit, and theunits are priced at $340 each. The equipment needed to beginproduction has an installed cost of $16,200,000. This equipment isconsidered industrial machinery and thus qualifies as seven-yearMACRS property. In five years, this equipment can be sold for about20 percent of its acquisition cost. The firm is in the 37 percentmarginal tax bracket and has a required return on all its projectsof 16 percent. Based on these preliminary project estimates, whatis the NPV of the project? What is the IRR?

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Samsung Inc. estimate unit sales for a new music amplifier asfollows: 75,000; 86,000; 95,000; 92,000; and 73,000 for year 1through year 5, respectively.Production of the implants will require $1,600,000 in networking capital to start and additional net working capitalinvestments each year equal to 18 percent of the projected salesincrease for the following year. Total fixed costs are $1,800,000per year, variable production costs are $250 per unit, and theunits are priced at $340 each. The equipment needed to beginproduction has an installed cost of $16,200,000. This equipment isconsidered industrial machinery and thus qualifies as seven-yearMACRS property. In five years, this equipment can be sold for about20 percent of its acquisition cost. The firm is in the 37 percentmarginal tax bracket and has a required return on all its projectsof 16 percent. Based on these preliminary project estimates, whatis the NPV of the project? What is the IRR?