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it needs to follow the same format please You are a manager at Pereolated Fiber, which is considering expanding its operations in synthetic fiber manufhcturing.
it needs to follow the same format please
You are a manager at Pereolated Fiber, which is considering expanding its operations in synthetic fiber manufhcturing. Your boss comes into your office, drops a consultant's report on your desk, and complnins, "We owe these consultants $1 million for this report, and I am not sure their analysis makes sease. Before we pead the $25 million on new equipment needed for this projeet, look it over and give me your opinion. "You opea 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 equipment that will be purchased today (year 0), which is what the accounting department recommended. The report concludes that because the project will increase carnings by $4.875 million per ycar for ten years, the project is worth $48.75 million. You think back to your halcyon days in finance class and realize there is more work to be done! irst, you note that the eensuitasts have not fictored in the fact that the projeot will require $10 million in working apital ip front (year 0 ), which will be fully recovered a year 10. Noxt, you sce they have ettributed 52 millioti of 9. Given the avainable information, what are the froe cash flews in years 0 through 10 that ahould be used to You are a manager at Pereolated Fiber, which is considering expanding its operations in synthetic fiber manufhcturing. Your boss comes into your office, drops a consultant's report on your desk, and complnins, "We owe these consultants $1 million for this report, and I am not sure their analysis makes sease. Before we pead the $25 million on new equipment needed for this projeet, look it over and give me your opinion. "You opea 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 equipment that will be purchased today (year 0), which is what the accounting department recommended. The report concludes that because the project will increase carnings by $4.875 million per ycar for ten years, the project is worth $48.75 million. You think back to your halcyon days in finance class and realize there is more work to be done! irst, you note that the eensuitasts have not fictored in the fact that the projeot will require $10 million in working apital ip front (year 0 ), which will be fully recovered a year 10. Noxt, you sce they have ettributed 52 millioti of 9. Given the avainable information, what are the froe cash flews in years 0 through 10 that ahould be used to Step by Step Solution
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