Next, you see they have attributed $1.68 million of selling, general and administrative expenses to the project, but you know that $0.84 million of this amount is overhead that will be incurred even if the project is not accepted. Finally, you know that accounting earnings are not the right thing to focus on!

a. Given the available information, what are the free cash flows in years 0 through 10 that should be used to evaluate the proposed project?

b. If the cost of capital for this project is 10%, what is your estimate of the value of the new project?

AppendixLO1