Assume that in the original Ityesi example in Table

Year 0-4 needed.

Assume that in the original Ityesi example in Table E, all sales actually occur in the United States and are projected to be $63.4 million per year for four years. Keeping other costs the same, calculate the NPV of the investment opportunity. Assume the WACC is 6.8%. The forward exchange rates are given below. Year 1 3 Forward Exchange Rate ($/) 1.4182 1.4941 1.5003 1.3784 1.3895 Calcualte the cash flows below: (Round to three decimal places. Forward exchange rates must be rounded to four decimal places.) Year 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 2 4 Incremental Earnings Forecast ( millions) 1 Sales Cost of Goods Sold 37.500 37.500 37.500 37.500 (15.625) (15.625) (15.625) (15.625) 3 Gross Profit 21.875 21.875 21.875 21.875 (5.625) (5.625) 4 Operating Expenses (4.167) (5.625) (5.625) (3.750) (3.750) 5 Depreciation EBIT (3.750) (3.750) (4.167) 12.500 12.500 12.500 6. 12.500 1.667 (5.000) Income tax at 40% (5.000) (5.000) (5.000) 8 Unlevered Net Income (2.500) 7.500 7.500 7.500 7.500 Free Cash Flow Plus: Depreciation 10 Less: Capital Expenditures 3.750 3.750 3.750 3.750 (15.000) 11 Less: Increases in NWC (17.500) 11.250 11.250 12 Pound Free Cash Flow 11.250 11.250