Matheson 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: a New equipment would have to be acquired to produce the device. The equipment would cost $480,000 and have a six-year useful life. After six years, it would have a salvage value of about $12,000 b. Sales in units over the next six years are projected to be as follows: 15,800 20,000 22,000 24,000 4-6 c Production and sales of the device would require working capital of $61,000 to finance accounts receivable, inventories, and da to-day cash needs. This working capital would be released at the end of the project's life d. The devices would sell for $60 each: variable costs for production, administration, and sales would be $45 per unit e. Fixed costs for salaries, maintenance, property taxes, insurance, and st raight-line depreciation on the equipment would total 155,000 per year. (Depreciation is based on cost less salvage value.) t To gain rapid entry into the market, the company would have to advertise heavily. The advertising costs would be Amount of Yearly Advertising 238.000 1-2 Prey4 of 4