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Assume that in the original Ityesi example in Table , all sales actually occur in the United States and are projected to be $56.1 million

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Assume that in the original Ityesi example in Table , all sales actually occur in the United States and are projected to be $56.1 million per year for four years. Keeping other costs the same, calculate the NPV of the investment opportunity. Assume the WACC is 6.8%. The forward exchange rates are given below. Year Forward Exchange Rate ($/) 2 1.6144 3 1.5697 1.7007 1.4171 1.5684 1 Data Table - X Calcualte the cash flows below: (Round to three decimal places. Forward exchange rates must be rounded to four decimal places.) Year L Free cash flow (millons of pounds) Forward exchange rate Free cash flow (millons of dollars) Sales in the US (millons of dollars) Cash flow (millons of dollars) TABLE 31.1 Expected Foreign Free Cash Flows from Ityesi's U.K. Project SPREADSHEET Year 0 Incremental Earnings Forecast ( millions) 1 Sales - 37.500 37.500 37.500 37.500 2 Cost of Goods Sold (15.625) (15.625) (15.625) (15.625) 3 Gross Profit 21.875 21.875 21.875 21.875 4 Operating Expenses (4.167) (5.625) (5.625) (5.625) (5.625) 5 Depreciation (3.750) (3.750) (3.750) (3.750) 6 EBIT (4.167) 12.500 12.500 12.500 12.500 7 Income tax at 40% 1.667 (5.000) (5.000) (5.000) (5.000) 8 Unlevered Net Income (2.500) 7.500 7.500 7.500 7.500 Free Cash Flow 9 Plus: Depreciation 3.750 3.750 3.750 3.750 10 Less: Capital Expenditures (15.000) - - - 11 Less: Increases in NWC 12 Pound Free Cash Flow (17.500) 11.250 11.250 11.250 11.250 Print Done that in the originallyel example in Table m al sales actually occur in the United States and are projected to be 556.1 million per year for four years. Keeping other costs the same, calculate the NPV of the investment opp orward Exchange Rate (VE) 1.7007 .4171 16144 1 697 16684 at the cash flows below. Round to three decimal places. Forward exchange rates must Data Table Free cash flow millions of pounds) Forward exchange rate Free cash flow milions of dollars) Sales in the US milions of dollars) Cash flow (millions of dollars) TABLE 31.1 SPREADSHEET Expected Foreign Free Cash Flows from Ityesi's U.KProject 1 Year 0 millions - 14.167) Incremental Earnings Forecast 1 Sales 2 Cost of Goods Sold 3 Gross Profit 4 Operating Expensos 5 Depreciation 6 EBIT 7 Income tax at 40% Unlevered Net Income Free Cash Flow 9 Plus Depreciation 10 Loss Capital Expenditures 11 Loss Increases in WC 12 Pound Free Cash Flow 37600 37600 37000 37600 (15 623 05.026) (15.025(15.625 21875 21.075 2106 21076 5.6250 15.626) 525) 5.625 3.750 0.750 0.750 C27500 12.500 2.500 12000 126.00 5.000 50000 5000 5.000 2500 2500 2500 2500 14.167) 1667 2.500 3.750 3.750 3.750 3.750 - (15.000! 117500 11.250 11.250 1250 11250 PW

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