Relevant 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 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 $$158,000$ over the next $5$ years. Sales revenue, as shown in the income statement for $2020,$ totaled $$20,900,000.$ If the proposed marketing campaign is not initiated, sales are expected to remain at this level in each of the next $5$ years, $2021$ through $2025.$ With the marketing campaign, sales are expected to rise to the levels shown in the table campaign outlays$)$ is expected to remain at $8\%$ of sales; and annual depreciation expense is expected to remain at $$500,000.$ Assuming a $21\%$ tax rate, find the net cash flows over the next $5$ years associated with the proposed marketing campaign.

SOLVE EACH BELOW

Marcus Tube

Calculation of Relevant Cash Flow $($$$000)$

$2021$

Sales

Cost of Goods Sold $(73\%)$

Gross profit

Less: Operating expenses

Genersl and Administrative expense $(8\%)$

Marketing Campaign

Depreciation

Total Operating Expenses

Net Profit Before Taxes

Less: Taxes $(21\%)$

Net Profit After Taxes

Operating cash flow

Incremental Cash Flow