A. What are the free cash flows of the project?

B. In years 1 through 7 there are no capital expenditures or change in net working capital.

c. Compute the FCF in the year 8 of the project.

D. If the cost of capital is 15% what is the NPV of the project?

Amold Inc. is considering a proposal to manufacture high and protein bars used as food supplements by body builders. The project requires ute of an existing warehouse, which im acquired three years ago for $2 million and which currently rents out for $101.000. Rental rates are not expected to change going forward. In addition to using the warehouse, the project requires an upfront investment into machines and other equipment of $1.6 million. This investment can be fully depreciated train over the next 10 years for tax purposes. However Amolding expects to terminate the project at the end of eight years and to sell the machines and equipment for 5514,000. Finally, the project requires an investment in networking capital equal to 10 percent of predicted first years. Subsequently, networking capitalis 10 percent of the predicted sales over the following year Sales of protein bars are expected to be 54.8 million in the fest year and to stay constant for eight years. Total manufacturing costs and operating expenses (excluding depreciation) e 10 percent of sales and profits are taxed at 30 percent Amold Inc. is considering a proposal to manufacture high-end protein bars used as food supplements by bodybuilders. The project requires use of iting warehouse, which the form icquired three years ago for $2 million and which it currently rents out for $101.000. Rontrates are not expected to change going forward. In addition to using the warehouse, the project requires an upfront investment into machines and other equipment of $1.6 million. This investment can be depreciated straight over the next 10 years for tax purposes. However, Arnold Inc. expects to terminate the project at the end of eight years and to sell the machines and equipment for $594,000. Finally, the project requires an investment into nel working capital equal to 10 percent of predicted first year sales. Subsequently, not working capital is 10 percent of the predicted sales over the following year. Sales of protein bars are expected to be 54.8 million in the first year and to stay constant for eight years. Total manufacturing costs and operating expenses (excluding depreciation) are 80 percent of sales, and profits are taxed at 30 percent