CD C . 2 . value . ) information : would be $15 per unit . about $15 , 000 . released at the end of the project's life . behavior on the part of the vice pre 3 L Year CASE 8 - 32 Net Present Value Analysis of a New Product [ LO 8 - 21 4 - 0 . .... ... ...... . Sales in units over the next six years are projected to be as follows : . . . . . . \\. . . . . . Fixed costs for salaries , maintenance , property taxes , insurance , and straight - line depreciation The devices would sell for $35 each ; variable costs for production , administration , and sales on the equipment would total $135 , 000 per year . ( Depreciation is based on cost less salvage market appeal . The company has performed marketing and cost studies that revealed the following Production and sales of the device would require working capital of $50,000 to finance accounts receivable , inventories , and day- to-day cash needs . This working capital would be Matheson Electronics has just developed a new electronic device that it believes will have broad 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 2 2, 000 15 , 000 18, 000 Sales in Units 9, 000Capital Budgeting Decisions f. To gain rapid entry into the market , the company would have to advertise heavily . The adver - lising program would be :" Amount of Yearly Year Advertising 1 -. 2 $ 180 , 000 3 $ 150 , 000 4 - 6 . . $ 1 20 , 000 8. The company's required rate of return is 14 % . Required :` 1. Compute the net cash inflow ( cash receipts less yearly cash operating expenses) anticipated 2 . from sale of the device for each year over the next six years . 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 ? Appendix & A: The Concept of Presen ad a year from now for the LEARNING OBJE Up more Understand prese