Case 14.32 (Algo) Net Present Value Analysis of a New Product [LO14-2] Matheson Electronics has Just developed a new electronic device that it belleves will have broad market appeal. The company has performed marketing and cost studles that revealed the following Information: a. New equipment would have to be acquired to produce the device. The equlpment would cost $216,000 and have a slx-year useful Ife. After slx years, It would have a salvage value of about $12,000. b. Sales In units over the next slx years are projected to be as follows: c. Production and sales of the device would require working capltal of $53,000 to finance accounts recelvable, Inventorles, and dayto-day cash needs. This working capltal would be released at the end of the project's life. d. The devces would sell for $55 each; varlable costs for production, administration, and sales would be $40 per unit. e. Flxed costs for salarles, maintenance, property taxes, Insurance, and stralght-lline depreclation on the equipment would total $120,000 per year. (Depreclation is based on cost less salvage value.) f. To gain rapld entry into the market, the company would have to advertise heavly. The advertising costs would be: g. The company's required rate of return is 14%. Click here to vew Exhibit 14B1 and Exhibit 14B2 to determine the approprlate discount factor(s) 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 slx years. 2-a. Using the data computed in (i) 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? Answer is not complete. Complete this question by entering your answers in the tabs below. 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. (Negative amounts should be indicated by a minus sign.) Case 14.32 (Algo) Net Present Value Analysis of a New Product [LO14-2] Matheson Electronics has just developed a new electronic device that It belleves will have broad market appeal. The company has performed marketing and cost studles that revealed the following information: a. New equipment would have to be acquired to produce the device. The equlpment would cost $216,000 and have a slx-year useful Ife. After s[x years, It would have a salvage value of about $12,000. b. Sales In units over the next slix years are projected to be as follows: c. Production and sales of the device would require working capltal of $53,000 to finance accounts recelvable, Irventorles, and dayto-day cash needs. This working capltal would be released at the end of the project's life. d. The devices would sell for $55 each; varlable costs for production, administration, and sales would be $40 per unit. e. Flxed costs for salarles, maintenance, property taxes, Insurance, and stralght-llne depreclation on the equipment would total $120,000 per year. (Depreclation is based on cost less salvage value.) f. To gain rapld entry into the market, the company would have to advertise heavly. The advertising costs would be: g. The company's required rate of return is 14%. Click here to vew Exhiblt 14B1 and Exhlbit 14B2 to determine the approprlate discount factor(s) 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 slx years. 2-a. Using the data computed in (i) 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? Answer is not complete. Complete this question by entering your answers in the tabs below. Using the data computed in (1) above and other data provided in the problem, determine the net present value of the proposed investment. (Negative amounts should be indicated by a minus sign. Round your final answer to the nearest whole dollar amount.) Case 14.32 (Algo) Net Present Value Analysis of a New Product [LO14-2] Matheson Electronics has Just developed a new electronic device that it belleves will have broad market appeal. The company has performed marketing and cost studles that revealed the following Information: a. New equipment would have to be acquired to produce the device. The equlpment would cost $216,000 and have a slx-year useful Ife. After slx years, It would have a salvage value of about $12,000. b. Sales In units over the next slx years are projected to be as follows: c. Production and sales of the device would require working capltal of $53,000 to finance accounts recelvable, Inventorles, and dayto-day cash needs. This working capltal would be released at the end of the project's life. d. The devces would sell for $55 each; varlable costs for production, administration, and sales would be $40 per unit. e. Flxed costs for salarles, maintenance, property taxes, Insurance, and stralght-lline depreclation on the equipment would total $120,000 per year. (Depreclation is based on cost less salvage value.) f. To gain rapld entry into the market, the company would have to advertise heavly. The advertising costs would be: g. The company's required rate of return is 14%. Click here to vew Exhibit 14B1 and Exhibit 14B2 to determine the approprlate discount factor(s) 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 slx years. 2-a. Using the data computed in (i) 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? Answer is not complete. Complete this question by entering your answers in the tabs below. 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. (Negative amounts should be indicated by a minus sign.) Case 14.32 (Algo) Net Present Value Analysis of a New Product [LO14-2] Matheson Electronics has just developed a new electronic device that It belleves will have broad market appeal. The company has performed marketing and cost studles that revealed the following information: a. New equipment would have to be acquired to produce the device. The equlpment would cost $216,000 and have a slx-year useful Ife. After s[x years, It would have a salvage value of about $12,000. b. Sales In units over the next slix years are projected to be as follows: c. Production and sales of the device would require working capltal of $53,000 to finance accounts recelvable, Irventorles, and dayto-day cash needs. This working capltal would be released at the end of the project's life. d. The devices would sell for $55 each; varlable costs for production, administration, and sales would be $40 per unit. e. Flxed costs for salarles, maintenance, property taxes, Insurance, and stralght-llne depreclation on the equipment would total $120,000 per year. (Depreclation is based on cost less salvage value.) f. To gain rapld entry into the market, the company would have to advertise heavly. The advertising costs would be: g. The company's required rate of return is 14%. Click here to vew Exhiblt 14B1 and Exhlbit 14B2 to determine the approprlate discount factor(s) 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 slx years. 2-a. Using the data computed in (i) 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? Answer is not complete. Complete this question by entering your answers in the tabs below. Using the data computed in (1) above and other data provided in the problem, determine the net present value of the proposed investment. (Negative amounts should be indicated by a minus sign. Round your final answer to the nearest whole dollar amount.)