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 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 147,000 over the next 5 years. Sales revenue, as shown in the income statement for 2018 totaled $19,600,000. If the proposed marketing campaign is not initiated, sales are expected to remain at this level in each of the next 5 years, 2019 through2023 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 74% of sales; general and administrative expense (exclusive of any marketing campaign outlays) is expected to remain at 8% of sales; and annual depreciation expense is expected to remain at 520,000. 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 $19,600,000 Less: Cost of goods sold 14,504,000 Gross profits $5,096,000 Less: Operating expenses General and administrative expense $1,568,000 Depreciation expense 520,000 Total operating expense $2,088,000 Earnings before interest and taxes $3,008,000 Less: Taxes 1,203,200 Net operating profit after taxes $1,804,800 Year Sales revenue 2019 $20,100,000 2020 20,600,000 2021 21,100,000 2022 22,100,000 2023 23,100,000 Net cash flows for a marketing campaign Marcus Tube, a manufacturer of high-quality aluminum tubing, les maintained stable sales and profils over the past 10 years. Although the market for aluminum tubing has been expanding by 4% per year, Marcus has been unsuccessful in sharing the growth. To Increase its sales the fim is consicering an aggressive marketing campaign that centers on regularly running ads in all relevant trace Journals and exhibiting procucts at all major regloral and national trade shows. The campaign is expected to recuire an errusi tax deductible wienditure of $147,000 over the next 5 years. Sales revenue, as shown in the income statement for 2016 , betaled $19,500,000. If the proposed marketing campaign is not initiater sales are expected to remain at this evelin each of the next 5 years, 20-9 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 cast af geods sold is expected to remain at 74% of sales general and administrative expense (exclusive of any marketing campaign outlays) is canected to remain at 9% of sales; and annual repreciation expense is expected to remain at $20.000. Assuming a 40% tax rate, find the net cash flows over the next 5 years associated with the proposed maricating campaign. The annual opererting cash flow without the marketing campaign will be s Rourd to the namescolar.) Data Table A Data Table Click on the inan lacabar an the top-right corner of the data tahle halo in prer to copy its carterts into a spreadsheet.) Click on the Icon located on the top-right corner of the deta table below In order to nopy its contents into a sparshnet.) Marcus Tube Sales Forecast Year Sales revenue 2019 $20,100,000 2020 20,600,000 2024 21,100,000 2022 22,100,000 2023 23,100 000 S19,000,000 14,504,000 $5,095,000 Print Done Marcus Tube Income Statement for the Year Ended December 31, 2018 Sales reverunt Less: Cast of goods sold (74%) Gross profits Lees Operating expersas General and administralive expense 189) Deprecialion expense Tolal operating experise Eamings before interest and taxes Less: Taxes (40%) Not aperating profit after takes $1,568,000 520,000 $2.088,000 $3,000,000 1,203,200 $1,101,800 Print Done