Determine cash flows Kauai Tools Inc. is planning to invest in new manufacturing equipment to make a new garden tool. The new garden tool is expected to generate additional annual sales of 6,200 units at $44 each. The new manufacturing equipment will cost $114,100 and is expected to have a 10-year life and a $8,700 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: Line Item Description Cost Direct labor $7.50 Direct materials 24.40 Fixed factory overhead—depreciation 1.70 Variable factory overhead 3.80 Total $37.40 Determine the net cash flows for the first year of the project, Years 2–9, and for the last year of the project. Use the minus sign to indicate cash outflows. Do not round your intermediate calculations but, if required, round your final answers to the nearest dollar. Kauai Tools Inc.Net Cash Flowsblank
Determine cash flows Kauai Tools Inc. is planning to invest in new manufacturing equipment to make a new garden tool. The new garden tool is expected to generate additional annual sales of 6,200 units at $44 each. The new manufacturing equipment will cost $114,100 and is expected to have a 10-year life and a $8,700 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: Line Item Description Cost Direct labor $7.50 Direct materials 24.40 Fixed factory overhead—depreciation 1.70 Variable factory overhead 3.80 Total $37.40 Determine the net cash flows for the first year of the project, Years 2–9, and for the last year of the project. Use the minus sign to indicate cash outflows. Do not round your intermediate calculations but, if required, round your final answers to the nearest dollar. Kauai Tools Inc.Net Cash Flowsblank
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Determine cash flows
Kauai Tools Inc. is planning to invest in new manufacturing equipment to make a new garden tool. The new garden tool is expected to generate additional annual sales of 6,200 units at $44 each. The new manufacturing equipment will cost $114,100 and is expected to have a 10-year life and a $8,700 residual value. Selling expenses related to the new product are expected to be 5% of sales revenue. The
| Line Item Description | Cost |
|---|---|
| Direct labor | $7.50 |
| Direct materials | 24.40 |
| Fixed factory overhead— |
1.70 |
| Variable factory overhead | 3.80 |
| Total | $37.40 |
Determine the net cash flows for the first year of the project, Years 2–9, and for the last year of the project. Use the minus sign to indicate
| Line Item Description | Year 1 | Years 2-9 | Last Year |
|---|---|---|---|
| Initial investment | $Initial investment | ||
| Operating cash flows: | |||
| Annual revenues | $Annual revenues | $Annual revenues | $Annual revenues |
| Selling expenses | Selling expenses | Selling expenses | Selling expenses |
| Cost to manufacture | Cost to manufacture | Cost to manufacture | Cost to manufacture |
| Net operating cash flows | $Net operating cash flows | $Net operating cash flows | $Net operating cash flows |
| Total for Year 1 | $Total for Year 1 | ||
| Total for Years 2–9 (operating cash flow) | $Total for Years 2–9 (operating cash flow) | ||
| Residual value | Residual value | ||
| Total for last year | $Total for last year |
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