F. Other fixed costs for salaries, insurance, maintenance, and straight-line depreciation on equipment would total $107,500 per year (Straight line depreciation is used).

G. The companys required rate of return is 15%. Required 1. Compute the net cashflow (cash receipts less yearly cash operating expenses) anticipated from sale of the smart home camera for each year over the next 12 years. 2. Using the data in (1) above and the other data provided in the problem, determine the net present value of the proposed investment.

Capital Budgeting Case SmartCam Company has an opportunity to produce and sell an innovative new smart home camera for homes. To determine whether this would be a profitable and lucrative venture, the company has gathered the following data on probable costs and market potential. A. New equipment would have to be acquired to produce the smart home camera. The equipment would cost $100,000 and be usable for 12 years. After 12 years, it would have a salvage value equal to 10% of the original cost. B. An extensive marketing study projects sales in units over the next 12 years as follows. Year/Years 1 2 3 4-12 Sales in Units (each year) 4,000 7,000 10,000 12,000 C. The smart home camera would sell for $45 each; variable costs for production, administration and sales would be $25 per unit. D. To gain entry into the market, the company would have to advertise heavily in the early years of sales. The advertising program follows. Year/Years Amount of yearly advertising 1-2 $70,000 3 $50,000 4-12 $40,000