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: a. New equipment would have to be acquired to produce the device. The equipment would cost $240,000 and have a six-year useful life. 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: Year: 1 Sales in Units: 13,000 2 18,000 3 4-6 20,000 22,000 c. Production and sales of the device would require working capital of $56,000 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 $35 each; variable costs for production, administration, and sales would be $20 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.) 1. To gain rapid entry into the market, the company would have to advertise heavily. The advertising costs would be: Year 1-2 3 4-6 Amount of Yearly Advertising $ 128,000 $ 65,000 $ 55,000 g. The company's required rate of return is 17%. Click here to view Exhibit 148-1 and Exhibit 14B-2, to determine the appropriate 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 six years. 2-a. Using the data computed in (1) 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? Complete this question by entering your answers in the tabs below. Req 1 Req 2A Req 28 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 (1) 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? Complete this question by entering your answers in the tabs below. Req 1 Req 2A Req 28 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.) Incremental contribution margin Incrememental fixed expenses Net cash inflow (outflow) Year 1 Year 2 Year 3 Year 4-6 Req 1 Req 2A > EXHIBIT 14B-1 Present Value of $1;1(1+r)n Periods 4% 1 5% 0.962 0.952 6% 7% 8% 9% 11% 12% 13% 14% 0.943 0.935 0.926 0.917 0.901 0.893 0.885 2 0.925 0.907 0.890 0.873 0.857 0.842 0.826 0812 0.797 3 0.889 0.864 0.840 0.816 0.794 0.772 0.751 0.731 0.712 0.693 4 0.855 0.735 0.823 0.792 0.763 5 0.822 0,784 0.747 0.713 0.681 0.708 0.683 0.650 0.659 0.636 0.613 0.621 0.593 0.567 0.543 6 0.790 0.746 0.705 7 0.760 0.711 0.665 8 0.731 0.677 0.627 9 0.703 0.645 10 0.676 0.614 0.558 0.508 0.463 0.666 0.630 0.596 0.564 0.547 0.583 0.623 0.540 0.502 0.582 0.460 0.544 0.592 0422 0.535 0.507 0.480 0.513 0482 0.452 0.425 0.500 11 0.650 0.585 0.527 0475 0429 0.388 12 0625 0.557 0497 0.444 0.397 0.356 0.319 0.286 0.257 0.231 0.208 0.187 13 0.601 0.530 0.469 0415 0.368 0.326 0.290 0.258 0.229 0.204 0.182 14 0577 0.505 0442 0.388 0.340 0.299 0.263 0.232 0.205 0.181 15 0.555 0.481 16 0.534 0.458 17 0.417 0.362 0394 0.339 0513 0436 0371 0.317 0.315 0.275 0.239 0.209 0.188 18 19 20 0494 0.416 0.350 0.296 0396 0.331 0.277 0475 0456 0377 0312 0.258 21 22 23 24 0406 0326 0.262 0211 0.170 0.138 0.112 0247 0100 0.310 0.197 0.158 0126 0.102 23% 25% 21% 24% 22% 19% 20% 16% 17% 18% 10% 0.847 0.840 0.833 0.826 0.820 0.813 0.806 0.800 0.862 0.855 0.909 0.672 0.661 0.650 0.640 0.731 0.718 0.706 0.694 0.683 0512 0524 0.551 0.537 0.579 0.564 0.609 0.593 0.624 0423 0410 0.499 0482 0451 0.437 0467 0.534 0.516 0.355 0.341 0.328 0.456 0.437 0419 0.402 0.386 0.370 0.352 0.390 0.370 0.335 0.319 0.263 0.249 0.314 0.296 0.279 0400 0.376 0.354 0.333 0.285 0.266 0.249 0.233 0.218 0.376 0.351 0.327 0.305 0467 0434 0.404 0.209 0.194 0.263 0.243 0.225 0.180 0.333 0.308 0.284 0424 0.391 0.361 0.176 0.162 0.149 0.270 0.247 0.227 0.208 0.191 0.295 0.322 0.386 0.352 0.195 0.261 0.237 0.215 0.178 0.162 0.350 0.317 0.287 0.168 0.152 0.137 0.163 0.145 | 0.130 | 0.116 0.160 0.125 0.111 0.141 0.099 0.095 0.084 0.108 0.183 0.160 0.140 0.123 0.107 0.093 0.081 0.071 0.163 0.141 0.123 0.292 0.252 0.218 0.093 0.080 0.069 0060 0.270 0.231 0.198 0.170 0.146 0.125 0.108 0.095 0.059 0.081 0069 0.130 0.111 0.180 0.250 0.212 0.153 0.138 0.116 0.098 0.070 0.060 0.051 0.083 0.232 0.194 0.164 0.031 0.026. 0.051 0.043 0.037 0.073 0.061 0.178 0.149 0.124 0.104 0.087 0.215 0.031 0037 0.026 0.022 0.093 0.077 0.064 0.053 0.044 0.199 0.164 0.135 0.112 0439 0359. 0.294 0.242 0.038 0.032 0026 0.022 0.018 0.101 0056 0.046 0.083 0.068 0422 0.342 0.278 0.226 0.184 0.150 0.123 0049 0040 0.033 0.027 0.022 0.018 0.015 0.091 0.074 0.060 0023 0019 0.015 0.013 0.066 0.053 0.043 0035 0.028 0082 Ferare Foot Loose Lana Laars Lavasa Lavar La Loo 15% 0.877 0.870 0.769 0.756 0.743 0.783 0.675 0.658 0.641 0.592 0.572 0.552 0476 0.519 0.497 0.456 0.432 0.410 0.303 0.289 0.275 0.262 0.235 0.222 0.210 0.204 0.191 0.179 0.168 0.167 0.155 0.144 0.134 0.137 0.126 | 0.116 | 0.107) 0.148 0.135 0.123 0.124 0.112 0.102 0.092 0.104 0.093 0.084 0.075 0.088 0.078 0.069 0.062 0.074 0.065 0.057 0.051 0.062 0.054 0047 0.112 0.103 0.094 0.086 0.083. 0.076 0069 0.068 0.061 0.055 0.055 0.049 0.044 0045 0.040 0.035 0042 0.036 0.032 0.028 0.052 0.045 0039 0034 0.030 0026 0.023 0051 0.044 0038 0.032 0.028 0.024 0.021 0.018 0.043 0037 0.031 0.027 0.023 0020 0.017 0014 0.022 0019 0.016 0.014 0.012 0.018 0.015 0015 0.013 0.011 0013 0.011 0.009 0.009 0.007 0.012 0.010 0009 0007 0.010 0.008 0.007 0.006 Good Los Lagos Love 0.006 0.005 EXHIBIT 14B-2 Present Value of an Annuity of $1 in Arrears; 1r|1-1(1+r)n] Periods 4% I 5% 0.962 0.952 2 1.886 3 4 5 4.452 6. 5.242 7 6.002 8 6.733 9 10 8.111 7.722 7.360 11 8.760 8.306 12 9.385 8.863 13 9.986 9.394 14 15 16 7379 6974 6.604 17 8.544 8.022 7.549 7.120 6.729 18 19. 20 21 22 9.292 9.442 23 24 22% 23% 24% 25% 21% 20% 19% 18% 17% 16% 13% 15% 10% 12% 14% 11% 7% 8% 9% 6% 0.893 0.885 0.877 0.870 0.862 0.855 0.847 0.840 0.833 0.826 0.820 0813 0.806 0.800 1440 0.943 0.935 0.926 0.917 0.909 0.901 1528 1.509 1492 1474 1.457 1.668 1.647 1.713 1.690 1.626 1.605 1585 1.566 1547 1.783 1.759 1.736 1808 1859 1833 1.981 1952 2.042 2011 2.361 2.322 2.283 2.246 2.210 2.174 2.140 2.106 2.074 2.362 2.624 2.577 2.531 2487 2.444 2.402 2.404 2.775 2.723 2.673 2.540 2.494 2.448 2.743 2.589 2.690 2.639 2.798 2.974 2914 2.855 3.170 3.102 3.037 3.387 3312 3.240 2.689 3.630 3.546 3.465 3.058 2.991 2.864 2.803 2.745 2.926 3.274 3.199 3.127 3.890 3.791 3.020 2951 4.212 3.993 3.696 3.605 3.517 3.433 3.352 4.329 4.100 3.998 3.889 3.784 3.685 3.589 3498 3.410 3.326 3.245 3.167 3.092 4.355 4.231 4.111 4486 5076 4917 4.767 4.623 3.508 3.416 3.327 3.242 3.161 3.605 4.039 3.922 3.812 3.706 4868 4.712 4564 4.423 4.288 4.160 3329 5.389 5.206 5.033 3518 3.421 5.786 5.582 4.078 3.954 3.837 3.726 3.619 4.799 4.639 4487 4.344 4.207 6463 6.210 5.971 5.747 5.535 5.335 5.146 4.968 3.786 3.673 3.905 4.607 4451 4.163 4.031 4.303 5.995 5.759 5.537 5.328 5.132 4.946 4.772 7.435 7.108 6515 6.247 6.802 6.418 6.145 7.024 6.710 5.889 5.650 5426 5216 5.019 4.833 4659 4494 4339 4.192 4.054 3.923 3.799 3.902 4035 4.486 4.327 4.177 6.495 6.207 5.938 5.687 5.453 5.234 5.029 | 4.836 4.656 7.499 7.139 6.805 7.887 4.793 4.611 4439 4.278 4.127 3.985 3.851 8.384 7.943 7536 7.161 6.814 6.492 6.194 5.918 5.660 5.421 5.197 4988 4.533 4.362 4.203 4.053 3.912 6.750 6224 6.122 5.842 5.583 5342 5.118 4.910 4.715 7.487 7.103 7.904 8.853 8.358 4.432 4.265 4.802 4.611 6.002 5.724 5.468 5.229 5.008 8.244 7.786 7.367 6.982 6628 6.302 9.295 8.745 10.563 9.899 6462 6.142 5.847 5575 5.324 5.092 8.559 8.061 7.606 7.191 6.811 9.108 11 118 10.380 9.712) 8.313 7.824 8.851 11 652 10 838 10.106 9447 12.166 11.274 10.477 9.763 9.122 12.659 11.690 10.828 10.059 9372 13.134 12.085 11.158 10.336 9.604 13.590 12.462 11.470 10.594 9.818 14029 12.821 11.764 10.836 10.017 14:451 13.163 12.042 11.061 10.201 14 K57 13 489 12.303 11 272 10.371 9.580 15.247 13.799 12.550 11.469 10.529 9.707 farrel14.004 37-783, 11654 10.675 9.823) 3.566 3.463) 3.682 3.571 3.776 3656 3.725 3.780 4.108 3.962 3824 4.876 4.675 4.489 4.315 4.153 4.001 3.859 4.536 4.357 4.189 6265 5.954 5.668 5.405 5.162 6373 6047 5.749 5475 5.222 4.990 4.775 4.576 4.391 4219 4.608 4.419 4.243 4.080 3.928 7.250 6340 6.467 6.128 8.756 8201 7.702 5818 5.534 5.273 5.033 4.812 4.635 4442 4.263 4.097 3.942 8.950 6.550 6.198 5.877 5.584 5.316 5.070 4.843 8.365 7.839 7.366 6.938 4.460 4.870 4.657 4.279 4.110 3.954 6.623 7.469 7025 9.129 8514 7.963 6.259 5929 5.628 5.353 5.101 5.665 5.384 6312 5973 4.675 4476 4.292 4.121 3.963 5.127 4891 7562 7.102 6.687 8.649 8.075 4488 4.302 4.130 3.970 4.690 5.696 6011 5410 5.149 4.909 6.359 8.772 8.176 7645 7.170 6.743 4.703 4.499 4311 4.137 3.976 8.883 8.266 7.718 7.230 6.792 6.399 6.044 5.723 5432 5.167 4.925 3.981 5.182 4.937 4.713 4507 4.318 4.143 8.985 8348 7.784 7.283 6.835 6434 6073 5.746 5451 6.097 5.766 5.467 5.195 4948 4.721 4.514 4323 9.077 8422 7.843 7330 6.873 6464 4.938 4.730 4.033 3.887 40593.910 4.147 3.985