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MCS,PHD
Argosy University/ Phoniex University/
Nov-2005 - Oct-2011
Professor
Phoniex University
Oct-2001 - Nov-2016
Calculate cash flows
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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:
Â
Â
|
Direct labor |
$ 8.00 |
|
Direct materials |
22.00 |
|
Fixed factory overhead—depreciation |
8.40 |
|
Variable factory overhead |
3.60 |
|
Total |
$42.00 |
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Determine the net cash flows for the first year of the project, Years 2–9, and for the last year of the project.
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