complains. We owe these consutants $1.8 milion for this report, and I am net mure their andyis makes smsene. Belore we spend the $24.7 milibn on new oquipmert needed far thit project look it over and give me your opinion "You open the report and find the following estimates (in milions of dolars). departnent recommended. They also caloulnted the dopreciation asuming no savage valye for the equipment. The report concludes that because the project will increate earnings by 34.388 milion per year foe 10 yess, the project is werth 543.88 milion. You thirk beck to your fory deys in thance class and resklat here is meee work to be donal accepted. Finally, you know that scoourting earnings are not the right thing to focus onl b. If the cost of eapital for this project is 12%, what is your estrolshe of the value of the new project? You are a manager at Percolated Fiber, which is considering expanding its operations in synthetic fiber manufacturing. Your bos: complains, "We owe these consultants $1.8 million for this report, and I am not sure their analysis makes sense. Before we spen over and give me your opinion." You open the report and find the following estimates (in millions of dollars): All of the estimates in the report seem correct. You note that the consultants used straight-line depreciation for the new equipme department recommended. They also calculated the depreciation assuming no salvage value for the equipment. The report con million per year for 10 years, the project is worth $43.88 million. You think back to your glory days in finance class and realize the First, you note that the consultants have not included the fact that the project will require $11.4 million in working capital up front have attributed $1.976 million of selling, general, and administrative expenses to the project, but you know that $0.988 million of accepted. Finally, you know that accounting earnings are not the right thing to focus onl a. Given the available information, what are the free cash flows in years 0 through 10 that should be used to evaluate the propos b. If the cost of capital for this project is 12%, what is your estimate of the value of the new project? Data table (Click on the following icon in order to copy its contents into a spreadsheet)