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Answer :
The cash flows associated with this investment include the initial investment in the manufacturing equipment, any additional operating costs incurred, and the additional revenue generated from the sale of the new garden tool.
Investing in new manufacturing equipment involves an initial cash outflow to purchase the equipment. Additionally, there may be ongoing operating costs associated with the production of the garden tool, such as materials, labor, and overhead expenses. On the revenue side, the investment is expected to generate additional sales revenue from the sale of the new garden tool.
This revenue would be the product of the number of units sold (8,400 units) multiplied by the selling price per unit. The net cash flow from the investment would be the difference between the additional revenue generated and the initial investment and operating costs.
Therefore, to determine the cash flows associated with this investment, one would need to calculate the total initial investment, estimate the operating costs, and project the additional revenue from the sale of the garden tool.
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