Please provide the steps that were used to complete the problem. Need understadi

Question

Please provide the steps that were used to complete the problem. Need understading of the process...

Out of Eden 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 6,300 units at $48.00 each. The new manufacturing equipment will cost $122,800 and is expected to have a 10-year life and $9,400 residual value. The equipment will be depreciated using the straight-line method. 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: 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 Determine how many months in the future, from ttie date of the Initial investment, it will be when the cash for the Initial investment will be paid back. Round up to the nearest number of months.

Explanation / Answer

a

b.

It will atke 384 months

Out of Enden Inc Net Cash flows Year1 Year2-9 Last Year Initial Investment 122,800 Operating Cash flows: Annual revenues       302,400       302,400       302,400 Selling exp        15,120        15,120        15,120 Cost to manufacture       231,210       231,210       231,210 Net operating cash flows        56,070        56,070        56,070 Total for year1 66,730 Total for year 2-9        56,070 residual value          9,400 Total for last year        46,670

b.

It will atke 384 months

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