Matheson Electronics has Just developed a new electronic device that it believes 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 equipment would cost $$318,000$ and have a slx$-$year useful

Iffe. After slx years, It would have a salvage value of about $$18,000.$

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 $$62,000$ to finance accounts recelvable, Inventorles, 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 $$35$ each; varlable costs for production, administration, and sales would be $$15$ per unit.

e$.$ Fixed costs for salarles, maintenance, property taxes, insurance, and stralght$-$IIne depreclation on the equipment would total

$$169,000$ per year. $($Depreclation 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:

g$.$ The company's required rate of return is $8\%.$

Click here to vlew Exhibit $128-1$ and Exhibit $12$B$-2,$ to determine the appropriate discount factor$($s$)$ using tables.

Required:

Compute the net cash Inflow $($Incremental contribution margin minus incremental fixed expenses$)$ anticlpated from sale of the device

for each year over the next slx 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.

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.$)$