Determine cash flows

Kauai Tools 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 $20,000$ units at $$10$ each. The new manufacturing equipment will cost $$150,000$ and is expected to have a $10-$year life and a $$30,000$ residual value. Selling expenses related to the new product are expected to be $2\%$ 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

Total

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