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Matheson Electronics has just developed a new electronic device that it belleves will have broad market appeal. The company has performed marketing and cost studies

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Matheson Electronics has just developed a new electronic device that it belleves 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 $114,000 and have a six-year useful life. After six years, it would have a salvage value of about $6,000 b. Sales in units over the next six years are projected to be as follows: Year 1 2 3 4-6 Sales in 'Units 8,000 13, eee 15,000 17,000 c. Production and sales of the device would require working capital of $51,000 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 $45 each: variable costs for production, administration, and sales would be $30 per unit. e Fixed costs for salaries, maintenance, property taxes, insurance, and straight-line depreciation on the equipment would total $177,000 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 costs would be Year 1-2 3 4-6 Pomount of Yearly Advertising $ 32,000 $ 60,000 $ 50,000 9 The company's required rate of return is 6% Click here to view Exhibit 148-1 and Exhibit 14B2. 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 2-6. Using the data computed in (1) above and other dato provided in the problem, determine the net present value of the proposed investment 2-b. Would you recommend that Motheson accept the device as a new product

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