1 a. New equipment would have to be acquired to produce the device. The equipment would cost $150,000 and have a six-year useful fe After six years, it would have a salvage value of about $18,000 b. Sales in units over the next six years are projected to be as follows po Sales in Units Year ,e00 2 12.000 14,000 16,000 3 4- eBoo c. Production and sales of the device would require working capital of $47000 to finance accounts receivable, inventories, and day to-day cash needs. This working capital would be released at the end of the project's life d. The devices would sell for $60 each, variable costs for production, administration, and sales would be $45 per unit e. Fixed costs for salaries, maintenance, property taxes, insurance, and straight-line depreciation on the equipment would total $151.000 per year (Depreciation is based on cost less salvage value ) f To gain rapid entry into the market, the company would have to advertise heavily. The advertising costs would be Prire References Aount of Yearly Advertising $45,000 556,000 $46,000 Year 1-2 4-6 g. The company's required rate of return is 6% Click here to view Exhibit 138-1 and Exhibit 138 2, to determine the appropriate discount factoris) using tables Required 1 Compute the net cash inflow (incremental contribution margin minus incremental fixed expenses) anticipated from sale of the device for each year over the next six years 2-a. Using the data computed in () above and other data provided in the problem, determine the net present value of the proposed investment 2-b. Would you recommend that Matheson accept the device as a new product