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Matheson Electronics has just developed a new electronic device that it believes will have broad market appeal. The company has performed marketing and cost studies
Matheson Electronics has just developed a new electronic device that it believes will have broad market appeal. The company has performed marketing and cost studies that revealed the following information: New equipment would have to be acquired to produce the device. The equipment would cost $444,000 and have a six-year useful life. After six years, it would have a salvage value of about $6,000. Sales in units over the next six years are projected to be as follows: Year Sales in Units 1 18,000 2 23,000 3 25,000 46 27,000 Production and sales of the device would require working capital of $60,000 to finance accounts receivable, inventories, and day-to-day cash needs. This working capital would be released at the
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