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 7,600 units at $38 each. The new manufacturing equipment will cost $123,500 and is expected to have a 10-year life and a $9,500 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 $6.50 Direct materials 21.00 Fixed factory overhead-depreciation 1.50 Variable factory overhead 3.30 Total $32.30 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 $fill in the blank 1 Operating cash flows: Annual revenues $fill in the blank 2 $fill in the blank 3 $fill in the blank 4 Selling expenses fill in the blank 5 fill in the blank 6 fill in the blank 7 Cost to manufacture fill in the blank 8 fill in the blank 9 fill in the blank 10 Net operating cash flows $fill in the blank 11 $fill in the blank 12 $fill in the blank 13 Total for Year 1 $fill in the blank 14 Total for Years 2–9 (operating cash flow) $fill in the blank 15 Residual value fill in the blank 16 Total for last year $fill in the blank 17

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter12: Capital Budgeting: Decision Criteria

Section: Chapter Questions

Problem 22P: The Scampini Supplies Company recently purchased a new delivery truck. The new truck cost $22,500,...

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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 7,600 units at $38 each. The new manufacturing equipment will cost $123,500 and is expected to have a 10-year life and a $9,500 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	$6.50
Direct materials	21.00
Fixed factory overhead-depreciation	1.50
Variable factory overhead	3.30
	Total	$32.30

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	$fill in the blank 1
Operating cash flows:
Annual revenues	$fill in the blank 2	$fill in the blank 3	$fill in the blank 4
Selling expenses	fill in the blank 5	fill in the blank 6	fill in the blank 7
Cost to manufacture	fill in the blank 8	fill in the blank 9	fill in the blank 10
Net operating cash flows	$fill in the blank 11	$fill in the blank 12	$fill in the blank 13
Total for Year 1	$fill in the blank 14
Total for Years 2–9 (operating cash flow)		$fill in the blank 15
Residual value			fill in the blank 16
Total for last year			$fill in the blank 17

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