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Relevant cash flows for a marketing campaign Marcus Tube, a manufacturer of high-quality aluminum tubing, has maintained stable sales and prover the past 10 years.

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Relevant cash flows for a marketing campaign Marcus Tube, a manufacturer of high-quality aluminum tubing, has maintained stable sales and prover 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 vis sales, the firm is considering an aggressive marketing campaign that conters 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 annua tax-deductible expenditure of $142.000 over the next 5 years Sales revenue, as shown in the Income statement for 2020 totaled $19,000,000. If the proposed marketing campaign is not initiated, sales are expected to remain at this level in each of the next years, 2021 through 2025. 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 76% 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 $480,000. Assuming a 21% tax rate, find the net cash flows over the next 5 years associated with the proposed marketing campaign marcuse Calculation of Relevant Cash Flow (5000) X Data table of good sold (76% profit Operating expens al and administra ing campaign iation operating expen it before taxes axes (21%) I after taxes cash flow tal cash flow (Click on the icon here in order to copy the contents of the data table below into a spreadsheet.) Marcus Tube Income Statement for the Year Ended December 31, 2020 Sales revenue $19,000,000 Less: Cost of goods sold (76%) 14.440.000 Gross profits $4,560,000 Less: Operating expenses General and administrative expense (12%) $2,280,000 Depreciation expense 480.000 Total operating expense 52.760,000 Earnings before interest and taxes $1,800,000 378,000 Less: Taxes (21%) Net operating profit after taxes $1.422,000 Print Done Data table (Click on the icon here in order to copy the contents of the data table below into a spreadsheet.) Marcus Tube Sales Forecast Year Sales revenue 2021 $19,500,000 2022 20,000,000 2023 20,500,000 2024 21,500,000 2025 22,500,000 Print Done

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