Matheson Electronics has just developed a new electronic device that is believes will have brond market appeal. The company has performed marketing and cost studies that revealed the following information: a Now equipment would have to be acquired to produce the device The equpment would cost $144.000 and have a six-year useful life After six years it would have a salvage value of about 50.000 Sales in units over the next so years are projected to be as follows Your Sains in Units 1 18.000 2. 23,000 3 25 000 4-6 27.000 c. Production and sales of the device would require working capital of 560,000 to finance accounts receivable, inventories, and day-to-day cash needs. This working capital would be released at se end of the project's life d The devices would sell for $55 each; variable costs for production administration, and sales would be $40 per unit e Fixed costs for salaries, maintenanco, property taxes, insurance, and straight-line depreciation on the equipment would total $169,000 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 program would be Amount of Yearly Year Advertising 1-2 $ 89,000 3 $ 69.000 4-6 $ 59.000 9 The company's required rate of return is 15% httoral be the present value of the cash flows Required: 1 Computer net shows yearly cash operating expected of the device for each year over the news Year 46 Year 2 23.000 Year 25000 18.000 27.000 Sa in dollar Vanabis Contribution marge Fixed expenses Sales and other Advertising Total food expenses Net cash flow outflow 2 a Using the data computed in (1) above and other data provided in the problem determine the not presentate of the proposed investment (Any cash outflows should be indicated by a minus sign) Now Cost of equipment