Homework: Homework 5 Save 4 of 10 (4 complete) HW Score: 31.73%, 3.17 of 10 pts Score: 0.2 of 1 pt P11-23 (similar to) o Net cash flows for a marketing campaign Marcus Tube, a manufacturer of high-quality aluminum tubing, has maintained stable sales and profits over the past 10 years. Although the market for aluminum tubing has been expanding by 5% per year, Marcus has been unsucoessful in sharing this growth. To increase its sales, the firm is considering an aggressive marketing campaign that centers on regularly running ads in all relevant trade joumals and exhibiting products at all major regional and national trade shows. The campaign is expected to require an annual tax-deductible expenditure of $147.000 over the next 5 years. Sales revenue, as shown in the income statement for 2018 totaled $21,000,000. If the proposed marketing carpaign is not initiated, sales are expected to remain at this level in each of the next 5 years, 2019 through 2023. With the marketing campaign, sales are expected to rise to the levels shown in the table for each of the next 5 years; cost of goods sold is expected to remain at 72% of sales: general and administrative expense (exclusive of any marketing campaign outlays) is expected to remain at 12% of sales; and annual depreciation expense is expected to remain at $490,000. Assurning a 40% lax rale, find the nel cash flows over the next 5 years associated with the proposed marketing carripaign. Operating cash flow (40) Incremental cash flow A Data Table (Round to the nearest S1,000.) - X Marcus Tube Calculation of Relevant Cash Flow (5000) (Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.) 2020 i Data Table - X $21,000,000 15,120,000 $5,880,000 Sales Cost of good sold (72%) Gross profit Less: Operating expenses General and administrative experise (12%) Marketing campaign Depreciation Total operating expenses Net profit before taxes Leas: Taxes (40%) Net profit after taxes Operating cash flow Marcus Tube Income Statement for the Year Ended December 31, 2018 Sales revenue Less: Cost of goods sold (729) Gross profits Less: Operating expenses General and administrative expense (12%) Depreciation experise Tolal operating expense Earnings before interest and taxes Less: Taxes (40%) Net operating profit after taxes $2,520,000 490,000 $3,010,000 $2,870,000 1,148.000 $1,722,000 (Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.) Marcus Tube Sales Forecast Year Sales revenue 2019 S21,500,000 22,000,000 2021 22,500,000 2022 23,500,000 2023 24,500,000 2020 Print Done Print Done Incremental cash flow Enter any number in the edit fields and then click Check Answer. 3 parts remaining Clear All Check
