Calculate Cash Flows

Out of Eden, 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 5,200 units at $42.00 each. The new manufacturing equipment will cost $90,100 and is expected to have a 10-year life and $6,900 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		$7.10
Direct materials		23.40
Fixed factory overhead-depreciation		1.60
Variable factory overhead		3.60
	Total	$35.70

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Determine the net cash flows for the first year of the project, Years 29, 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						$

Cash Payback Period

Primera Banco is evaluating two capital investment proposals for a drive-up ATM kiosk, each requiring an investment of $296,000 and each with an eight-year life and expected total net cash flows of $592,000. Location 1 is expected to provide equal annual net cash flows of $74,000, and Location 2 is expected to have the following unequal annual net cash flows:

Year 1	$107,000
Year 2	77,000
Year 3	50,000
Year 4	38,000
Year 5	24,000
Year 6	142,000
Year 7	98,000
Year 8	56,000

Determine the cash payback period for both location proposals.

Location 1	Select12345678Item 1 years
Location 2	Select12345678Item 2 years