Question: Project life = 5 years Sales = $500,000/year Variable costs = 42% of sales fixed costs = $10,000 Change in Net working capital = $30,000

Project life = 5 years Sales = $500,000/year Variable costs = 42% of sales fixed costs = $10,000 Change in Net working capital = $30,000 Initial equipment cost = $250,000, to be depreciated straight line over 5 years to zero Tax rate = 22% Calculate CFFA for year 0 and year 1

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