- General, sales, and administrative expenses 2.3202.320 2.900 2.900 8.3800 8.3800 2.933 2.933 5447 5447 2.320 2.900 2.900 8.3800 8.3800 2.933 5.447 5.447 2.320 Net operating income - Income tax 2.933 - Net income All of the estimates in the report seem correct. You note that the consultants used straight-line depreciation for the new equipment that will be purchased today (year 0), which is what the accounting department recommended for financial reporting purposes. Canada Revenue Agency allows a CCA rate o 45% on the equipment for tax purposes. T e report concludes that because the project will increase earnings by $5.447 million per year ten years the pro ect is worth $54.47 milion. You think back to your glory days in finance class and realize there is more work to be done! First, you note that the consultants have not factored in the fact that the project will require $15 million in working capital up front (year 0), which will be fully recovered in year 10. Next, you see they have attributed S2.32 million of selling, general and administrative expenses to the project, but you know that $1.16 million of this amount is overhead that will be incurred even if the project is not accepted. Finally, you know that accounting earnings are not the right thing to focus on! a. Given the available information, what are the free cash flows in years 0 through 10 that should be used to evaluate the proposed project? a. Given the available information, what are the free cash flows in years 0 through 10 that should be used to evaluate the propcsed project? The free cash flow for year o is million. (Round to three decimal places and enter a decrease as a negative number) Enter your answer in the answer box and then click Check Answer 10 remaining parts Clear All Check Answer Question Help You are a manager at Northern Fibre, which is considering expanding its operations in synthetic fibre manufacturing. Your boss comes into your office, drops a consultant's report on your desk, and complains, "We owe these consultants $1.4 million for this report, and I am not sure their analysis makes sense. Before we spend the $29 million on new equipment needed for this project, look it over and give me your opinion." You open the report and find the following estimates (in millions of dollars): Project Year Earnings Forecast (S000,000s) Sales revenue -Cost of goods sold - Gross profit - General, sales, and administrative expenses 4.000 34.000 20.400 20.400 13.600 13.600 2.320 2.320 2.900 2.900 8.3800 8.3800 2.933 2.933 10 34.000 34.000 20.400 20.400 13.600 3.600 2.320 2.320 2.900 2.900 - Net operating income - Income tax 8.3800 8.3800 2.933 2.933 a. Given the available information, what are the free cash flows in years 0 through 10 that should be used to evaluate the proposed project? The free cash flow for yearO is milion. (Round to three decimal places and enter a decrease as a negative number.)