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Please answer the decisions and performance evaluation. ezto. Case 11-32 Net Present Value Analysis of a New Product [L011-2 Matheson Electronics has just developed a
Please answer the decisions and performance evaluation.
ezto. Case 11-32 Net Present Value Analysis of a New Product [L011-2 Matheson Electronics has just developed a new electronic device that it belines will have broad market appeal. The company has performed marketing and cost studies that revealed the following information: and have a six-year useful life. After six years, it would have a salvage value of about $8,000 b. Sales in units over the next six years are projected to be as follows: a. New equipment would have to be acquired to produce the device. The equipment would cost $114,000 in 8,000 13,000 15,000 17,000 4-6 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 d. The devices would sell for $45 each; variable costs for production, administration, and sales would be o. Fixed costs for salaries, maintenance, property taxes, insurance, and straight-line depreciation on the the project's life. $30 per unit equipment would total $177000 per year. (Depreciation is based on cost less salvage value.) To gain rapid entry into the market, the company would have to advertise heavily. The advertising program would be: Amount of Yearly Year 1-2 S 80,000 S 60,000 50,000 4-6 g. The company's required rate of return is 6%. Click here to view Exhibit 11B-1 and Exhibit 11B-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 Year 1 Year 2 Year 3 Year 4-6Step by Step Solution
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