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In: AccountingMatheson Electronics has just developed a new electronic devicethat it believes will have broad market...Matheson Electronics has just developed a new electronic devicethat it believes will have broad market appeal. The company hasperformed marketing and cost studies that revealed the followinginformation:New equipment would have to be acquired to produce the device.The equipment would cost $474,000 and have a six-year useful life.After six years, it would have a salvage value of about$24,000.Sales in units over the next six years are projected to be asfollows:YearSales in Units118,000223,000325,0004–627,000Production and sales of the device would requireworking capital of $62,000 to finance accounts receivable,inventories, and day-to-day cash needs. This working capital wouldbe released at the end of the project’s life.The devices would sell for $30 each; variable costsfor production, administration, and sales would be $15 perunit.Fixed costs for salaries, maintenance, propertytaxes, insurance, and straight-line depreciation on the equipmentwould total $144,000 per year. (Depreciation is based on cost lesssalvage value.)To gain rapid entry into the market, the companywould have to advertise heavily. The advertising costs wouldbe:YearAmount of YearlyAdvertising1–2$223,0003$71,0004–6$61,000The company’s required rate of return is 18%.