Question

Ch. 25 Assignment eBook Show Me HowCalculator Print Item Calculate Cash Flows 1. EX.25-10 Nature's Way Inc. is planning to invest in new manufacturing equipment to make a new garden tool. The new garden tool is expected to generate additional annual sales of 9,300 units at $32 each. The new manufacturing equipment will cost $120,900 and is expected to have a 10-year life and $9,300 residual value. Selling expenses related to the new product are expected to be 4% of sales revenue. The cost to manufacture the product includes the following on a per-unit basis: Direct labor Direct materials Fixed factory overhead-depreciation Variable factory overhead . EX 25-04.ALGO $5.40 17.90 1.20 2.70 $27.20 Total Determine the net cash flows for the first year of the project, Years 2-9, and for the last year of the project. Use the minus sign to indicate cash outflows. Do not round your intermediate calcaions but, if required, round your final answer to the nearest dollar Out of Eden, Inc. Net Cash Flows Year 1 Years 2-9 Last Year Initial investment 120,900v Operating cash flows: 297,600V 11,904 X 241,800 | Х 43,896 V 297,600 Annual revenues Selling expenses Cost to manufacture 297,600 V 11,904 X 241,800X 43,896 v 11,904 X 241,800 X Net operating cash flows 43,8963,89643.89 Total for Year 1 77,004 Total for Years 2-9 43,896 V Residual value 17,000 X Total for last year 60,896 X Foodback ▼Check My Work For Year 1, subtract the amount to be invested from the operating cash flows (annual revenues less selling expenses less cost to manufacture). For Years 2-10, subtract the selling expenses and the costs to manufacture from the annual revenues. For Year 10 only, add the residual value. Learning Objective 2.

Answer 1