Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Determine Cash Flows Marigold Inc. is planning to invest in new manufacturing equipment to make a new garden tool. The garden tool is expected to
Determine Cash Flows Marigold 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 5,000 units at $44 each. The new manufacturing equipment will cost $92,100 and is expected to have a 10-year life and $7,100 residual value. Selling expenses related to the new product are expected to be 4% of sales revenue. The cost to manufacture the product includes the following on a per-unit basis: Direct labor $7.50 Direct materials 24.40 1.70 Fixed factory overhead-depreciation Variable factory overhead 3.80 Total $37.40 Determine the net cash flows for the first year of the project, Years 2-9, and for the last year of the project. Use a minus sign to indicate cash outflows. Do not round your intermediate calculations but, if required, round your final answer to the nearest dollar. Marigold Inc. Net Cash Flows Year 1 Years 2-9 Last Year Initial investment -92,100 Operating cash flows: Annual revenues 220,000 220,000 220,000 Selling expenses -8,800 -8,800 -8,800 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
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started