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 $294,0lll} and have a six-year useful life. After six years, it would have a salvage value of about 555,000. b. Sales in units over the next six years are projected to be as follows: Year Sales in Unis 1 EJJEI 2 11,012\") 3 13.EIE|E| 46 15,l]li c. Production and sales of the device would require working capital of Fadilil] to nance accounts receivable, inventories, and day-today cash needs. This working capital would be released at the end of the project's life. d. The devices would sell for $50 each; variable costs for production: administration, and sales would be $31] per unit. e. Fixed costs for salaries, maintenance. property taxes, insurance, and straightline depreciation on the equipment would total $1?1,lil]l] per year. {Depreciation is based on cost less salvage value} f. To gain rapid entry into the market, the company would have to advertise heavily. The advertising program would be: mountf'far Year Mme 12 :5 moon 3 :5 54pm: 45 95 44.11110 g. The company's required rate of return is 3%. Use a spreadsheet to calculate the present value of the cash flows. Required: 1. Compute the net cash inow (cash receipts less veadv cash operating expenses} anticipated from sale oi the device tor each year over the next six 1rears. m _ _ ____ ___ um [om 2a Using the data computed in [1] above and other data provided in The problem, determine the net present value of the proposed investment. [Any cash outows should be indicated by a minus sign] 2-b. Would 1,roo recommend mat Matheson accept the device as a nevi.r product? 0 No D Yes