Metal Manufacturing manufactures over 20,000 different products made from metal, including building materials, tools, and furniture parts. The manager of the Furniture Parts division has proposed that his division expand into bicycle parts as well. The Furniture Parts division currently generates cash revenues of $4,550,000 and incurs cash costs of $3,650,000, with an investment in assets of $12,070,000. One-quarter of the cash costs are direct labour. C Now, identify and calculate the cash flows from operations. (Use parentheses or a minus sign for cash outflows.) Cash flows from operations Cash revenues Material cash costs Direct labour cash costs Increase in cash overhead costs $ 3,700,000 (1,720,000) (912,500) (390,000) Annual cash flows from operations with new equipment 677,500 Deduct: Income-tax payments (237,125) Annual after-tax cash flows from operations $ 440,375 Add: Income-tax cash savings from annual depreciation 153,650 $ 594,025 Total cash flows from operations (after-tax) Now, identify and calculate the cash flows from the terminal disposal of investment. Terminal disposal of investment Terminal disposal of equipment Terminal disposal of working capital Cash flow from terminal disposal of investment $ 460,000 43,000 503,000 Now, identify the cash flows that are not relevant to the capital budgeting of this situation. (Select all that apply.) ✓ A. The investment in the furniture parts division Additional information The manager estimates that the expansion of the business will require an investment in working capital of $43,000. Because the company already has a facility, there would be no additional rent or purchase costs for a building, but the project would generate an additional $390,000 in annual cash overhead. Moreover, the manager expects annual materials cash costs for bicycle parts to be $1,720,000, and labour for the bicycle parts to be about the same as the labour cash costs for furniture parts. The Controller of Metal, working with various managers, estimates that the expansion would require the purchase of equipment with a $4,850,000 cost and an expected disposal value of $460,000 at the end of its 10-year useful life. Depreciation would occur on a straight-line basis. The CFO of Metal determines the firm's cost of capital as 8%. The CFO's salary is $420,000 per year. Adding another division will not change that. The CEO asks for a report on expected revenue for the project and is told by the marketing department that it might be able to achieve cash revenue of $3,700,000 annually from bicycle parts. Metal Manufacturing has a tax rate of 35%. The CCA rate is 25%. Print Done Costs of the furniture parts division except for direct labour ☐ C. Increase in cash overhead costs D. The revenues in the furniture parts division E. Direct labour costs of the furniture parts division CFO salary Requirement 2. Calculate the net present value (NPV) of the expansion project and comment on your analysis. First, calculate the NPV of the expansion project. (Round your answer to the nearest whole dollar. Use parentheses or a minus sign for a negative NPV.) NPV = $