Buhler Industries is a farm implement manufacturer. Management is currently evaluating a proposal to build a plant that will manufacture lightweight tractors. Buhler plans to use a cost of capital of 12% to evaluate this project. Based on extensive research, it has prepared the following incomplete incremental free cash flow projections (in millions of dollars):

The relevant CCA rate for the capital expenditures is 20%. Assume assets are never sold.

Using the indirect method requires a separate calculation of the CCA tax shield. What is:

the present value of the CCA tax shield?

The free cash flow

The NPV

additionally, for this base-case scenario, what is the NPV of the plant to manufacture lightweight tractors? What is the NPV of this project if revenues are 10% higher than forecast? What is the NPV if revenues are 10% lower than forecast?

\begin{tabular}{|c|c|c|c|} \hline Free Cash Flow ($000,000s) & Year 0 & Years 1-9 & Year 10 \\ \hline Revenues & & 99.00 & 99.00 \\ \hline - Manufacturing expenses (other than depreciation) & & -38.00 & -38.00 \\ \hline - Marketing expenses & & -8.00 & -8.00 \\ \hlineCCA & & ? & ? \\ \hline=EBIT & & ? & ? \\ \hline - Taxes (35%) & & ? & ? \\ \hline= Unlevered net income & & ? & ? \\ \hline+CCA & & ? & ? \\ \hline - Increases in net working capital & & -5.00 & -5.00 \\ \hline - Capital expenditures & -146.00 & & \\ \hline + Continuation value & & & 10.00 \\ \hline= Free cash flow & -146.00 & ? & ? \\ \hline \end{tabular}