Determine the net cash flows for the first year

Reference no: EM131129983

Calculate cash flows

Nature's Way 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 2,500 units at $60 each. The new manufacturing equipment will cost $227,000 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	$ 8.00
Direct materials	22.00
Fixed factory overhead-depreciation	8.40
Variable factory overhead	3.60
Total	$42.00

Determine the net cash flows for the first year of the project, Years 2-9, and for the last year of the project.

Reference no: EM131129983

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