Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Please explain me how to calculate PV using excel on this example Matheson Electronics has just developed a new electronic device that it believes will
Please explain me how to calculate PV using excel on this example
Matheson Electronics has just developed a new electronic device that it believes will have broad market appeal. The company has periformed 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 $180,000 and have a six-year useful life. After stax years, it would have a salvage value of about $18,000. b. Sales in units over the next six years are projected to be as follows: Yearsolesinunits123469,cee14,cee16,cee18,eee c. Production and sales of the device would require working capital of $50,000 to finance accounts receivable, inventories, and dayto-dey cash needs. This working capital would be releosed at the end of the project's iffe. d. The devices would sell for $40 each; variable costs for production, administration, and sales would be $25 per unit. e. Fixed costs for salaries, mointenance, property taxes, insurance, and straightitine depreciation on the equipment would total $125,000 per year. (Depreciation is based on cost less salvege value.) t. To gain rapid entry into the market, the company would heve to advertise heavily. The advertising costs would be: 9. The company's required rate of return is 13%. Click here to view Exhibit 7821 and Fxhibit 78.2, to determine the oppropriate discount factor(s) using tabies. Aequiredt 1. Compute the net cash inflow (incremental contribution margen minus incremental fixed expenses) antijpated from sale of the device for each year over the next six years. 2.a. Using the data computed in (i) above and other date provided in the problem, determine the net present value of the proposed investment. 2b. Would you recommend that Matheson accept the device as a new product? Click here to view Exhibit 781 and Exhibit 78-2, to determine the appropriate discount factor(s) using tables. Reculreds 1. Compute the net cash inflow (incremental contribution margin minus incremental fixed expenses) anticipated from sale of the do for each year over the next six years. 2-a. Using the data computed in (i) above and other data provided in the problem, determine the net present value of the propost investment. 2-b. Would you recommend that Matheson accept the device as a new product? Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Compute the net cash inflow (incremental contribution margin minus incremental fixed expenses) antidpated from sale of the device for each year over the next six years. (Negative amounts should be indicated by a minus sign.) Click here to view Exhibit 781 and Exhibit 782, 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-a. Using the data computed in (i) above and other data provided in the problem, determine the net present value of the proposed Investment. 2-b. Would you recommend that Matheson accept the device as a new product? Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. Using the data computed in (1) above and other data provided in the problem, determine the net present value of the proposed investment. (Negative amounts should be indicated by a minus sign, Round your final answer to the nearest whole dollar amount.) 9. The company's required rate of return is 13%. Click here to view Exhibit 78-1 and Exhibit 78-2, to determine the appropriate discount factor(s) using tables. Reculreds 1. Compute the net cash inflow (incremental contribution margin minus incremental fixed expenses) anticipated from sale of the devici for each year over the next six years. 2-a. Using the data computed in (1) above and other data provided in the problem, determine the net present value of the proposed Imvestment. 2-b. Would you recommend that Matheson accept the device as a new product? 8. Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. 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
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started