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 4 % per year, Marcus has been unsuccessful 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 journals and exhibiting products at all major regional and national trade shows. The campaign is expected to require an annual tax-deductible expenditure of$ 141,000 over the next 5 years. Sales revenue, as shown in the income statement for 2018 (graph posted below), totaled $20,300,000. If the proposed marketing campaign 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 (below) for each of the next 5 years; cost of goods sold is expected to remain at 75 % of sales; general and administrative expense (exclusive of any marketing campaign outlays) is expected to remain at 10 % of sales; and annual depreciation expense is expected to remain at $510,000. Assuming a 40% tax rate, find the net cash flows over the next 5 years associated with the proposed marketing campaign.

Marcus Tube Income Statement for

the Year Ended December 31, 2018

Sales revenue: $20,300,000

Less: Cost of goods sold (75%): 15,225,000

Gross profits: $5,075,000

Less: Operating expenses

General and administrative expense (10 %): $2,030,000

Depreciation expense: 510,000

Total operating expense: $2,540,000

Earnings before interest and taxes:$2,535,000

Less: Taxes (40 %): 1,014,000

Net operating profit after taxes: $1,521,000

Marcus Tube Sales Forecast

2019 20,800,000

2020 21,300,000

2021 21,800,000

2022 22,800,000

2023 23,800,000

The annual operating cash flow without the marketing campaign will be $? (Round to the nearest dollar.)