Gardeneer Inc. is planning to invest $184,000 in a new garden tool that is expected to generate additional sales of 7,500 units at $38 each. The $184,000 investment includes $54,000 for initial launch-related expenses and $130,000 for equipment that has a 10-year life and a $17,500 residual value. Selling expenses related to the new product are expected to be 6% of sales revenue. The cost to manufacture the product includes the following per-unit costs:
Determine the net cash flows for the first year of the project, years 2-9, and for the last year of the project.
Insert cash outflows in parentheses. For example an outflow of 45,000 would be entered as (45000).
Year 1 Years 2 - 9 Last Year
Initial investment $
Operating cash flows:
Annual revenues $ $ $
Selling expenses $ $ $
Cost to manufacture $ $ $
Net operating cash flows $ $ $
Total for year 1 $
Total for years 2-9 $
Residual value $
Total for last year $