Determine Cash Flows

Natural Foods 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 $5,000$ units at $$18$ each. The new manufacturing equipment will cost $$120,000$ and is expected to have a $10-$year life and a $$17,000$ residual value. Selling expenses related to the new product are expected to be $3\%$ of sales revenue. The cost to manufacture the product includes the following on a per$-$unit basis:

Direct labor $ $2\mathrm{.}50$

Direct materials $3\mathrm{.}20$

Fixed factory overhead$$depreciation $2\mathrm{.}40$

Variable factory overhead $0\mathrm{.}90$

Total $$9\mathrm{.}00$

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.

Natural Foods Inc.

Net Cash Flows

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Year $1$ Years $2-9$ Last Year

Initial investment $fill in the blank $1$

Operating cash flows:

Annual revenues $fill in the blank $2$ $fill in the blank $3$ $fill in the blank $4$

Selling expenses fill in the blank $5$ fill in the blank $6$ fill in the blank $7$

Cost to manufacture fill in the blank $8$ fill in the blank $9$ fill in the blank $10$

Net operating cash flows $fill in the blank $11$ $fill in the blank $12$ $fill in the blank $13$

Total for Year $1$ $fill in the blank $14$

Total for Years $29($operating cash flow$)$ $fill in the blank $15$

Residual value fill in the blank $16$

Total for last year $fill in the blank $17$