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Secure Homes is pondering an opportunity to produce and sell o new smart home monitoring syrtem that can be maringed rematey using a smartphane app.

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Secure Homes is pondering an opportunity to produce and sell o new smart home monitoring syrtem that can be maringed rematey using a smartphane app. The company has gathered the following data on probable costs and market porential 2. New equipment would have to be acquired to produce the monitoring system. The equipment would cost 5315,000 aha be usabie for 10 years. After 10 years, it would have a solvage value equal to 10% of the original cost. b Production and sales of the monitoring system would require a working capital investment of $132,000 to finance accourts receivable, inventories, and day-to-day cash needs. This working capital would be released for use elsewhere by the company athet to years c. An extensive marketing study projects sales in units over the next 10 years as follows: d. The monitoring systems would sell for $133 each; variable costs for production, administration, and sales would be $80 per unit To gain entry into the market, the company would have to advertise heavily in the early years of sales. The advertising program follows: f. Other fixed costs for salaries, insurance, maintenance, and straight-line depreciation on equipment would totat $3 is, ooo per ye st (Depreciation is based on cost less salvage value.) (9) The company's required rate of return is 14% (ignore income taxes.) Required: 1. Compute the net cash inflow (cash receiptstess yearly cash operating expenses) anticipated from sale of the monitoring systems fo each year over the next 10 years. (Enter any cosh outtiows with a minus sign. Round your intermediate and finai answers to the nearest dollar amount.) The net cash inflow from sales of the device for each year would be: The net cash infow from sales of the device for each year would be 2-a. Using the data computed in requirement (1) above and other data provided in the problem, determine the net piesent value of the proposed investment. (Hint Use Microsoft Excel to calculate the discount factor(s).) (Negative amount should be indicated by a minus sign. Do not round intermediate calculations and PV factor. Round the final answers to the nearest whole dollar amount.) 2-b. Would you recommend that Secure Homes invest in the new product? Yes No 3. What is the project's internal rate of return? (Hint Use Microsoft Excel to calculate the discount factoris)) (Round your answer to 1 decimal place.)

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