Marcus Tube, a manufacturer of high-quality aluminum tubing, has maintained stable sales and profits over the past 10 years. Although the market for aluminum tubing has been expanding by 3% per year, Marcus has been unsuccessful in sharing this growth. To increase its sales, the firm is considering an aggressive marketing campaign that centers on regularly running ads in all relevant trade journals and exhibiting products at all major regional and national trade shows. The campaign is expected to require an annual tax deductible expenditure of $150,000 over the next 5 years. Sales revenue, as shown in the accompanying income statement for 2012, totaled $20,000,000. If the proposed marketing campaign is not initiated, sales are expected to remain at this level in each of the next 5 years, 2013 through 2017. With the marketing campaign, sales are expected to rise to the levels shown in the accompanying table for each of the next 5 years; cost of goods sold is expected to remain at 80% of sales; general and administrative expense (exclusive of any marketing campaign outlays) is expected to remain at 10% of sales; and annual depreciation expense is expected to remain at $500,000. Assuming a 40% tax rate, find the relevant cash flows over the next 5 years associated with the proposed marketingcampaign.

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Marcus Tubc Income Statcment for the Year Ended December 31, 2012 Sales revenue $20,000,000 16,000,000 S 4.000,000 Less: Cost of goods sold (80%) Gross profits Less: Opcrating expenses $2,000,000 500,000 2,500.000 S 1,500,000 600,000 S 900,000 General and administrative expense (10%) Depreciation expense Total operating expense Earnings before interest and taxes Less: Taxes (rate = 40%) Net operating profit after taxes Marcus Tube Sales Forccast Sales revcnuc $20,500,000 21,000,000 21,500,000 22,500,000 23,500,000 car 2013 2014 2015 2016 2017