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Determine Cash Flows Natural Foods 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 5,600 units at $54 each. The new manufacturing equipm $127,400 and is expected to have a 10-year life and a $9,800 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 pe Direct labor $9.20 Direct materials 30.00 Fixed factory overhead-depreciation 2.10 Variable factory overhead 4.60 Total $45.90 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 outfiows. Do not round your intermediate calculations but, if required, round your fin. nearest dollar. Natural Foods Inc. Net Cash Flows Year 1 Years 2-9 Last Year Initial investment $ V -127.400 Operating cash flows: Annual revenues V 302,400 V 302,400 V 302,400 Selling expenses -15,120 V -15,120 V -15,120 Cost to manufacture -257.040 X -257.040 x -257.040 X Net operating cash flows 30,240 X 30,240 x 30.240 x Total for Year 1 $ 97,160 X Total for Years 2-9 (operating cash flow) 241.920 X Residual value 9,800 V

Determine Cash Flows Natural Foods 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 5,600 units at $54 each. The new manufacturing equipm $127,400 and is expected to have a 10-year life and a $9,800 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 pe Direct labor $9.20 Direct materials 30.00 Fixed factory overhead-depreciation 2.10 Variable factory overhead 4.60 Total $45.90 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 outfiows. Do not round your intermediate calculations but, if required, round your fin. nearest dollar. Natural Foods Inc. Net Cash Flows Year 1 Years 2-9 Last Year Initial investment $ V -127.400 Operating cash flows: Annual revenues V 302,400 V 302,400 V 302,400 Selling expenses -15,120 V -15,120 V -15,120 Cost to manufacture -257.040 X -257.040 x -257.040 X Net operating cash flows 30,240 X 30,240 x 30.240 x Total for Year 1 $ 97,160 X Total for Years 2-9 (operating cash flow) 241.920 X Residual value 9,800 V

Essentials Of Investments
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 Natural Foods 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 5,600 units at $54 each. The new manufacturing equipment will cost $127,400 and is expected to have a 10-year life and a $9,800 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 $9.20 Direct materials 30.00 Fixed factory overhead-depreciation 2.10 Variable factory overhead 4.60 Total $45.90 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. Natural Foods Inc. Net Cash Flows Year 1 Years 2-9 Last Year Initial investment -127,400 Operating cash flows: Annual revenues 302,400 v $ 302,400 V $ 302,400 Selling expenses -15,120 V -15,120 V -15,120 V Cost to manufacture -257,040 X -257,040 X -257,040 x Net operating cash flows 30,240 X $ 30,240 X $ 30,240 X Total for Year 1 $ 97,160 X Total for Years 2-9 (operating cash flow) 241,920 X Residual value 9,800 Total for last year 40,040 X
Transcribed Image Text:Determine Cash Flows Natural Foods 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 5,600 units at $54 each. The new manufacturing equipment will cost $127,400 and is expected to have a 10-year life and a $9,800 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 $9.20 Direct materials 30.00 Fixed factory overhead-depreciation 2.10 Variable factory overhead 4.60 Total $45.90 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. Natural Foods Inc. Net Cash Flows Year 1 Years 2-9 Last Year Initial investment -127,400 Operating cash flows: Annual revenues 302,400 v $ 302,400 V $ 302,400 Selling expenses -15,120 V -15,120 V -15,120 V Cost to manufacture -257,040 X -257,040 X -257,040 x Net operating cash flows 30,240 X $ 30,240 X $ 30,240 X Total for Year 1 $ 97,160 X Total for Years 2-9 (operating cash flow) 241,920 X Residual value 9,800 Total for last year 40,040 X
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