Matheson Electronics developed a new electronic device it believes will have broad market appeal. The company gathered the following estimates:

a$.$ The equipment needed to make the device would cost $\backslash (\backslash$$ $480,000\backslash )$ and have a six$-$year useful life with a salvage value of $\backslash (\backslash$$ $12,000\backslash ).$

b$.$ Sales in units over the next six years are projected to be as follows:

c$.$ Production and sales of the device would require working capital of $\backslash (\backslash$$ $61,000\backslash )$ to be released at the end of the project's life.

d$.$ The device would sell for $\backslash (\backslash$$ $60\backslash )$ each with a variable cost of $\backslash (\backslash$$ $45\backslash )$ per unit.

e$.$ Fixed costs for salaries, maintenance, property taxes, insurance, and straight$-$line depreciation on the equipment would total $\backslash$$$155,000$ per year. $($Depreciation is based on cost less salvage value.$)$ f$.$ To gain rapid entry into the market, the company would invest heavily in advertising as follows:

g$.$ The company's required rate of return is $\backslash (15\backslash \%\backslash ).$

Click here to view Exhibit $14$B$-1$ and Exhibit $14$B$-2,$ to determine the appropriate discount factor$($s$)$ using tables.

Required:

$1.$ Compute the device's estimated net cash inflow $($incremental contribution margin minus incremental fixed expenses$)$ for each year over the next six years.

$2-$a$.$ Calculate the net present value of the proposed investment.

$2-$b$.$ Should Matheson invest in the new device? $\backslash$begin$\{$tabular$\}\{|$l$|$l$|$l$|$l$|$l$|\}$

$\backslash$hline $\backslash$multicolumn$\{1\}\{|$c$|\}\{$ Year $1\}$ & $\backslash$multicolumn$\{1\}\{$c$|\}\{$ Year $2\}$ & Year $3$ & Year $4-6\backslash \backslash$

$\backslash$hline Incremental contribution margin & & & & $\backslash \backslash$

$\backslash$hline Incrememental fixed expenses & & & & $\backslash \backslash$

$\backslash$hline Net cash inflow $($outflow$)$ & & & & $\backslash \backslash$

$\backslash$hline

$\backslash$end$\{$tabular$\}$