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Buhler Industries is a farm implernent manufacturer. Management is currently evaluating a proposal to build a plant that will manufacture lightwoight Iractors. Buhler plans to

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Buhler Industries is a farm implernent manufacturer. Management is currently evaluating a proposal to build a plant that will manufacture lightwoight Iractors. Buhler plans to use a cost of capital of 12% to evaluate this project Based on extensive research. at has prepared the following incomplete incremental free cash flow projections (in millions of dollars)s The relevant CCA rate for the capital expenditures is 20%. Assume assets are never sold. a. For this base-case scenario, what is the NPV of the plant to manufacture Eightweight tractors? b. Based on input from the marketing department, Buhler is uncertain about its revenue forecast in particular, management would like to examine the sensitivily of the NPV to the revenue assumptions. What is the NPV of this project if revenues are 10\% higher than forecast? What is the NPV of this projoc if reverues are 10% lower than forecast? Using the indirect method requires a separate calculation of the cCA tax shield What is the present value of the cch tax shield? The present value of the CCA tax shield is 5 malion. (Round to two decinaal places.) a. For this base-case scenaro, what is the NPV of the plant to manufacture lightweight tractors? The NPV is $ milion. (Round to two decimal places) "b. Based on input from the marketing department, Buhler fs uncertain about its revenue forecast In particula, management would Eke to examine the sensitivity of the NPV to the revenue assumptions. 1. What is the NPV of this project if revenues are 10% higher than forecast? The NeV is S milison. (Round to two decimat places) 2. What is the NPV if revenues are 10% lower than forecast? The NPV is 5 million. (Round to two decimal places)

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