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Question 4 (2 points) What is the CFFA in Yr 4? (in thousands) Your Answer: Answer Capital Budget Perfect Strangers Inc, are thinking of taking
Question 4 (2 points) What is the CFFA in Yr 4? (in thousands) Your Answer: Answer Capital Budget Perfect Strangers Inc, are thinking of taking on the following project: 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 cach 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)
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