Question
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
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 6,300 units at $36 each. The new manufacturing equipment will cost $95,500 and is expected to have a 10-year life and a $7,300 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: Line Item Description Cost Direct labor $6.10 Direct materials 20.00 Fixed factory overheaddepreciation 1.40 Variable factory overhead 3.10 Total $30.60 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 answers to the nearest dollar.
manufacture the product includes the following on a per-unit basis: required, round your final answers to the nearest dollarStep by Step Solution
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