Matheson Electronics has just developed a new electronic device that it bebeves will have to 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 equipment would cost $144.000 and have a six-year useful life After six years would have a salvage value of about 50.000 Sales in units over the next sx 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 500,000 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 555 each; variable costs for production, administration, and sales would be $40 per unit e Food 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 4-5 $ 59.000 9 The company's required rate of return is 15% latticarut the present value of the cash flows Required: 1. Compute the cash flow cases yearly cash operating periodo of the device for each year over the next years Yet 18.000 Year 2 23.00 Yaara 25.000 Year 4.6 27.000 Sales in ons Saces in dollar Vanato per Contribution marge Fred expenses Sales and other Advertising Total food expenses Net cash now outflow) 2 a Using the data computed in (1) above and other data provided in the problem determine the not present value of the proposed investment (Any cash outflows should be indicated by a minus sign) Now Cost of equipment 2- Using the data computed in (t) above and other data provided in the problem, determine the net present value of the proposed investment (Any cash outflows should be indicated by a minus sign) Now Cost of equipment Working Capital Yearly not cash flows Roioase of working capital Salvage value of equipment Total cash flows Present value Nel present value 2-b. Would you recommend that Matheson accopt the device as a now produch? Yes NO