Question
A new machine will cost $2.3M and will last for 4 years. At the end of 4 years the machine can be sold for $300K.
A new machine will cost $2.3M and will last for 4 years. At the end of 4 years the machine can be sold for $300K. Executives believe sales will be $2M each year for the next 4 years (no growth), with cost of goods sold 40% of sales. Fixed costs for the production are $200K/yr. Net working capital required for each year are $100K, $120K, $150K, and $90K respectively. Prefect Strangers Inc. uses straight line depreciation and has a tax rate of 25% and has a required rate of return of 12% (NOTE: Answers will be requested in thousands of $, i.e. $2.3M = $2300K)
What is the operating CF in Year 1?(in thousands)
What is the CFFA in Yr 1? (in thousands)
What is the CFFA in Yr 3? (in thousands)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started