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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 $150,000 and have a six-year useful life.After six years, it would have a salvage value of about$18,000.Sales in units over the next six years are projected to be asfollows:YearSales in Units17,000212,000314,0004–616,000Production and sales of the device would requireworking capital of $47,000 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 $60 each; variable costsfor production, administration, and sales would be $45 perunit.Fixed costs for salaries, maintenance, propertytaxes, insurance, and straight-line depreciation on the equipmentwould total $151,000 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$45,0003$56,0004–6$46,000The company’s required rate of return is 6%.Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determinethe appropriate discount factor(s) using tables.Required:1. Compute the net cash inflow (incremental contribution marginminus incremental fixed expenses) anticipated from sale of thedevice for each year over the next six years.2-a. Using the data computed in (1) above and other dataprovided in the problem, determine the net present value of theproposed investment.2-b. Would you recommend that Matheson accept the device as anew product?