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Saved Help Save & Exit Submit 10 Check my work Electronics has just developed a new electronic device that it believes will have broad market
Saved Help Save & Exit Submit 10 Check my work 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 life. After six years, it would have a salvage value of about $18,000. a. $318.000 and have a six-year useful b. Sales in units over the next six years are projected to be as follows 8, 000 13,000 15,000 17,000 4-6 c. Production and sales of the device would require working capital of $62.000 to finance accounts receivable, inventories, and day to-d ay cash needs. This working capital would be released at the end of the project's life. d. The devices would e. Fixed costs for salaries, maintenance, property taxes, insurance, and straight-line depreciation on the equipment would total sell for $35 each; variable costs for production, administration, and sales would be $15 per unit. $169,000 per year. (Depreciation is based on cost less salvage value. f. To gain rapid entry into the market, the company would have to advertise heavily. The advertising costs would be: vertising $120,000 $ 51,000 s 41,000 g. The company's required rate of return is 8%
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