Evaluate the total cash flows

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Reference no: EM136069

Out of Eden, Inc., is forecasting to invest in new manufacturing equipment to prepare a new garden tool. The new garden tool is expected to generate extra annual sales of 5,500 units at $38.00 each. The new manufacturing equipment may cost $89,300 and is expected to have a 10-year life and $6,800 residual value. Selling expenses associated to the new product are expected to be 5 percent of sales revenue. The cost to manufacture the product includes the subsequent 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

a. Evaluate the total 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 show cash outflows. Do not round your intermediate evaluation but, if required, round your final answer to the nearest dollar.

Reference no: EM136069

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