Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

oh goodness?? i guess i need help on both then. please Using the data computed in (1) above and other data provided in the problem,

image text in transcribed
image text in transcribed
image text in transcribed
oh goodness?? i guess i need help on both then. please
image text in transcribed
image text in transcribed
Using the data computed in (1) above and other data provided in the problem, determine the net present value of the proposed investment. Would you recommend that Matheson accept the device as a new product? 2. Expert Q&A Done 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 S315,000 and have a six-year useful life. After six years, it would have a salvage value of about $15,000. b.Sales in units over the next six years are projected to be as follows: Year Sales in Units 9,000 15,000 18,000 22,000 4-6 c. Production and sales of the device would require working capital of $60,000 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. would be S15 per unit. on the equipment would total $135,000 per year. (Depreciation is based on cost less salvage d.The devices would sell for S35 each; variable costs for production, administration, and sales e. Fixed costs for salaries, maintenance, property taxes, insurance, and straight-line depreciation value.) f. To gain rapid entry into the market, the company would have to advertise heavily. The advertising program would be: Amount of Yearly Advertising $180,000 $150,000 $120,000 Year 1-2 4-6 The company's required rate of return is 14%. g. Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using tables. Required: 1.Compute the net cash inflow (cash receipts less yearly cash operating expenses) anticipated from sale of the device for each year over the next six years. Answer 1 of 1 Done 1.Computation of net cashflows Year 1 Year 2 Year 3 | Year 4 9000 15000 18000 22000 Sales in dollars(sales units x$35)315000 525000 630000 0000 Sales in units 180000 300000 360000 440000 135000 135000 135000 23000 493000 Advertising 315000 315000 1350001500075000 55000 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 New equipment would have to be acquired to produce the device. The equipment would cost $315,000 and have a six-year useful life. After six years, it would have a salvage value of about $15,000. b. Sales in units over the next six years are projected to be as follows: Year Sales in Units 9,000 15,000 18,000 2. 3. 4-6 ....22,000 c. Production and sales of the device would require working capital of $60,000 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 $35 each; variable costs for production, administration, and sales would be $15 per unit. e. Fixed costs for salaries, maintenance, property taxes, insurance, and straight-line depreciation on the equipment would total $135,000 per year. (Depreciation is base on cost less salvage value.) To gain rapid entry into the market, the company would have to advertise heavily. The advertising program would be: f Amount of Yearly Advertising $180,000 $150,000 $120,000 Year 1-2 4-6 The company's required rate of return is 14%. g. Required: 1. Compute the net cash inflow (cash receipts less yearly cash operating expenses) anticipated from sale of the device for each year over the next six years. 2. Using the data computed in (1) above and other data provided in the problem, determine the net present value of the proposed investment. Would you recommend that Matheson accept the device as a new product

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Forensic Accounting And Financial Statement Fraud Forensic Accounting Performance

Authors: Zabihollah Rezaee

1st Edition

1949991075, 978-1949991079

More Books

Students also viewed these Accounting questions

Question

Define induction and what are its objectives ?

Answered: 1 week ago

Question

Discuss the techniques of job analysis.

Answered: 1 week ago

Question

How do we do subnetting in IPv6?Explain with a suitable example.

Answered: 1 week ago

Question

Explain the guideline for job description.

Answered: 1 week ago

Question

What is job description ? State the uses of job description.

Answered: 1 week ago

Question

Employ effective vocal cues Employ effective visual cues

Answered: 1 week ago