OBJ. 2 Chapter 26 Capital Investment Analysis 1297 EX 26-4 Calculate cash flows Nature's Way 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 1,600 units at $75 each. The new manufacturing equipment will cost $257,000 and is expected to have a 10-year life and $17,000 residual value. Selling expenses related to the new product are expected to be 5% of sales revenue. The cost to manufacture the product includes the following on a per-unit basis: Direct labor $12.00 Direct materials Fixed factory overhead-depreciation Variable factory overhead Total $61.50 30.00 15.00 4.50 Determine the net cash flows for the first year of the project, Years 2-9, and for the last year of the project. OBJ. 2 EX 26-5 Cash payback period for a service company Rrime Financial Inc. is evaluating two capital investment proposals for a drive-up ATM Povestment of $200,000 and each with an eight-year life and