Calculate Cash Flows Nature\'s Way Inc. is planning to invest in new manufacturi

Question

Calculate Cash Flows 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 6,600 units at $42 each The new manufacturing equipment will cost $114,400 and is expected to have a 10-year life and $8,800 residual value. Selling expenses related to the new product are expected to be 5% 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 $7.10 23.40 1.60 3.60 35.70 factory overhead 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 calculations 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 Operating cash flows: Annual revenues Selling expenses Cost to manufacture Net operating cash flows Total for Year 1 Total for Years 2-9 Residual value Total for last year

Explanation / Answer

Calculate net cash flow :

Year 1 Year 2-9 Last year Initial investment -114400 Operating cash flows Annual revenue 277200 277200 277200 Selling expense -13860 -13860 -13860 Cost to manufacture -225060 -225060 -225060 Net operating cash flows 38280 38280 38280 Total for year 1 -76120 Total for years 2-9 306240 Residual value 8800 Total for last year 47080

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