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Data Problem 3 Matheson Electronics has just developed a new device which, when mounted on an automobile, will tell the driver how many miles the automobile is traveling per gallon of gasoline. The company is anxious to begin production of the new device. To this end, marketing and cost studies have been made to determine probable costs and market potential. These studies have rovided the followin nformation MATHESON ELECTRONICS Probable costs and market potential: $315,000 New equipment cost Needed to produce device. Usable life in years 12 Salvage value $15,000 At the end of 12 years. Working capital investment $60,000 Released at the end of 12 years. Projected sales over next 12 years: Yea Unit Sale 6.000 12,000 15,000 4-12 8,000 Unit selling price $35 Variable costs per unit $15 for production, admin and selling. Fixed costs per year $135,000 Salaries, Maintenance, property taxes, insurance & depreciation. Advertising costs: Yea Amount 1-2 $180,000 3 $150,000 4-12 $120,000 Minimum rate of return 14% Required 1. Compute the net cash inflow (cash receipts less yearly cash operating expenses) anticipated from sale of the device for each year over the next 12 years. 2. Using the data computed in (1) above and other data provided in the problem, determine the net present value of the proposed investment

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