Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Calculate Cash Flows Nature's Way Inc. is planning to invest in new manufacturing equipment to make a new garden tool. The garden tool is expected

Calculate Cash Flows

Nature's Way Inc. is planning to invest in new manufacturing equipment to make a new garden tool. The garden tool is expected to generate additional annual sales of 1,600 units at $75 each. The new manufacturing equipment will cost $257,000 and is expected to have a 10-year life and $17,000 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$12.00

Direct materials30.00

Fixed factory overheaddepreciation15.00

Variable factory overhead4.50

Total$61.50

Determine the net cash flows for the first year of the project, Years 2-9, and for the last year of the project. Do not round your intermediate calculations but, if required, round your final answer to the nearest dollar. Use a minus sign to indicate cash outflows.

Nature's Way 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$

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Forensic And Investigative Accounting

Authors: G. Stevenson Smith D. Larry Crumbley, Edmund D. Fenton

10th Edition

0808056301, 9780808056300

More Books

Students also viewed these Accounting questions