K 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): Year 0 Free Cash Flow ($000,000s) Revenues - Manufacturing expenses (other than depreciation) - Marketing expenses - CCA = EBIT - Taxes (35%) = Unlevered net income + CCA - Increases in net working capital - Capital expenditures + Continuation value = Free cash flow - 149.00 - 149.00 Years 1-9 Year 10 113.00 -34.00 - 10.00 ? ? ? ? ? - 5.00 ? 113.00 - 34.00 - 10.00 ? ? ? ? ? - 5.00 10.00 ? The relevant CCA rate for the capital expenditures is 10%. Assume assets are never sold. a. For this base-case scenario, what is the NPV of the plant to manufacture lightweight tractors? b. Based on input from the marketing department, Buhler is uncertain about its revenue forecast. In particular, management would like to examine the sensitivity 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 project if revenues are 10% lower than forecast?

Please answer a and b

Buhler Industries is a farm implement manufacturer. Management is currently evaluating a proposal to buld a plant that wil manufacture lightweight tractors. Buhler plans to use a cost of capital of 12% to evalunte this project. Based on extensive resoarch, it has prepared the foltowing incomplefe incremental free cash flow projections (in millions of dollars): The relevant CCA rote for the capital expenditures is 10\%. Assume assets are never sold. a. For this base-case scenario. What is the NPV of the plant to manufacture fightweinht tractors? b. Based on inpuit from the marketing department, Buhler is uncertain about its revenue forecast, In particular, managarnent would like to exarnine the sensitivity of the NPV to the revenue arsumptions. What is the NPV of this project if revenues are to\% higher man forecas? What is the NPV of this propect if revenues are 105 lower than forecast? Buhler Industries is a farm implement manufacturer. Management is currently evaluating a proposal to buld a plant that will manufacture lightweight tractors. Britier plans to use a cost of captal of 12% to evaluate this project. Based on extensive research, it has prepared the following incomplote incremental free cash flow projections (in millions of dollars): The relovant CCA rate for the capital expenditures is 10%. Assume assets are never sold. a. For this base-case scenario, what is the NPV of the plant to manufacture lightweight tractors? b. Basod on input from the marketing department, Buhler is uncertain about its revenue forecast. In particular, management would tike 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 project if revenues are 10% lower than forecast? Buhler Industries is a farm implement manufacturer. Management is currently evaluating a proposal to buld a plant that wil manufacture lightweight tractors. Buhler plans to use a cost of capital of 12% to evalunte this project. Based on extensive resoarch, it has prepared the foltowing incomplefe incremental free cash flow projections (in millions of dollars): The relevant CCA rote for the capital expenditures is 10\%. Assume assets are never sold. a. For this base-case scenario. What is the NPV of the plant to manufacture fightweinht tractors? b. Based on inpuit from the marketing department, Buhler is uncertain about its revenue forecast, In particular, managarnent would like to exarnine the sensitivity of the NPV to the revenue arsumptions. What is the NPV of this project if revenues are to\% higher man forecas? What is the NPV of this propect if revenues are 105 lower than forecast? Buhler Industries is a farm implement manufacturer. Management is currently evaluating a proposal to buld a plant that will manufacture lightweight tractors. Britier plans to use a cost of captal of 12% to evaluate this project. Based on extensive research, it has prepared the following incomplote incremental free cash flow projections (in millions of dollars): The relovant CCA rate for the capital expenditures is 10%. Assume assets are never sold. a. For this base-case scenario, what is the NPV of the plant to manufacture lightweight tractors? b. Basod on input from the marketing department, Buhler is uncertain about its revenue forecast. In particular, management would tike 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 project if revenues are 10% lower than forecast