Kelley\'s Baskets makes handmade baskets for distribution to upscale retail outl
ID: 1174672 • Letter: K
Question
Kelley's Baskets makes handmade baskets for distribution to upscale retail outlets. The firm is currently considering making handmade wreaths as well. Which one of the following is the best example of an incremental operating cash flow related to the wreath project? o storing supplies in the same space currently used for materials storage. O Utilizing the basket manager to oversee wreath production O Hiring additional employees to handle the increased workload should the firm accept the wreath project. O Researching the market to determine if wreath sales might be profitable before deciding to proceed. O Planning on lower interest expense by assuming the proceeds of the wreath sales will be used to reduce the firm's currently outstanding debt.Explanation / Answer
2-
cash outflow
-28000-2800
-30800
Year
cash flow
present value of cash flow = cash flow/(1+r)^n r = 145
0
-30800
-30800
1
32500
28508.77
2
32500
25007.69
3
32500
21936.57
4
32500
19242.61
5
32500
16879.48
6
32500
14806.56
7
35300
14107.2
net present value
sum of present value of cash flow
109688.9
cash flow in year 7
32500+2800
35300
1-
Hiring additional employees to handle the increased workload should the firm accept the wreath project
2-
cash outflow
-28000-2800
-30800
Year
cash flow
present value of cash flow = cash flow/(1+r)^n r = 145
0
-30800
-30800
1
32500
28508.77
2
32500
25007.69
3
32500
21936.57
4
32500
19242.61
5
32500
16879.48
6
32500
14806.56
7
35300
14107.2
net present value
sum of present value of cash flow
109688.9
cash flow in year 7
32500+2800
35300
1-
Hiring additional employees to handle the increased workload should the firm accept the wreath project
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