Question

32 The manager of a canned food processing plant is trying to decide between two labelling machines. Construct the incremental net cash flow table for each year. (5 Points) Please upload your detailed answer to your professor MS Teams after the exam. Machine 1 -15,000 -1,600 Machine 2 -25,000 -400 Initial Cost, $ Annual Operating cost, $ per year Salvage Value, $ Service Life, Years 4,000 3,000 2 4

Answer 1

Answert り cash How is the net cash flow from all the cash in flows and Outflows over a specific time and between tuo business choices. 07 more Machine I = 15000 – 300012 GO00 +1600 = 7600 Plachaine 2 5250 + 400 25000 – 4000/4 = 5650 comparison between 1& 2 Machines. Machine I is more economical than machines 2 Business may project the net effects on the cash flow statement of investing in a new business line or expanding an existing business line. The project with the highest incremental cash flow may be choosen better investment option, incremental cash flow progetting are required for calculating a project's net present value (nov), internal rate of return (IRR) and Payback period. proceeting as the Incremental cash flows may also be helpful in the

deo son of whether to invest in certain assets that sheet assume that will appear on the balance business is Lolling to develop a new product line and has two attencetives, Line A and Line B. over the next year, Line o is protected to have revenues $50,000. Line B is of $200.000 and expenses of of $325,000 and expenses expected to have revenues Line A woulld require an initial cash of $190.000 aetlery of $35,000 and Line B would be require m anitial cush Outlay of $ 25,000. ancremental cash flows are determined by subtrceting fitm cash flows without the project from firm cash flows with the project. if lower des of existing poodeets are products are a direct result of introducing the the new products, the should deduct the lost cash flows from expected cash flows from the new products, Company