P 9-29 Bauer Industries is an automobile manufacturer. Management is currently evaluating a proposal to build (similar plant that will manufacture lightweight trucks. Bauer plans to use a cost of capital of 11.8% to evaluate 1 to). t. Based on extensive research, it has prepared the incremental free cash flow projections shown b projec (in millions of dollars) 1-9 10 Year Revenues Manufacturing Expenses (other than depreciation) Marketing Expenses 97.9 -32.1 - 10.4 -15.4 40.0 - 14.0 26.0 +15.4 -5.7 97.9 - 32.1 -32.1 - 10.4 -15.4 40.0 - 14.0 26.0 +15.4 5.7 EBIT Taxes at 35% Unlevered Net Income Depreciation Additions to Net Working Capital Capital Expenditures - 153.6 +12.8 48.5 Continuation Value Free Cash Flow 153.6 35.7 a. For this base-case scenario, what is the NPV of the plant to manufacture lightweight trucks? b. Based on input from the marketing department, Bauer is uncertain about its revenue forecast. In parti management would like to examine the sensitivity of the NPV to the revenue assumptions. What is the of this project if revenues are 8% higher than forecast? What is the NPV if revenues are 8% lower than forecast? c. Rather than assuming that cash flows for this project are constant, management would like to explore sensitivity of its analysis to possible growth in revenues and operating expenses. Specifically, managem would like to assume that revenues, manufacturing expenses, and marketing expenses are as given in tho table for year 1 and grow by 3% per year every year starting in year 2. Management also plans to assum the initial capital expenditures (and therefore depreciation), additions to working capital, and continuatic value remain as initially specified in the table. What is the NPV of this project under these alternative assumptions? How does the NPV change if the revenues and operating expenses grow by 5% per year n to assume that revenues, manufacturing expenses, and marketing expenses arc as given in th assumptions? How does the NPV change if the revenues and operating expenses than by 3%? d. To examine the sensitivity of this project to the discount rate, To examine the sensitivity of this project to the discount rate, management would like to compute the from 5% to 30%. For what ranges of discount rates does the project have a positive NPV? a. For this base-case scenario, what is the NPV of the plant to manufacture lightweight trucks? The NPV of the plant to manufacture lightweight trucks, based on the estimated free cash flow is S 53.81 million. (Round to two decimal places.) b. Based on input from the marketing department, Bauer is uncertain about its revenue forecast. In b. Based on input from the marketing department, Bauer is uncertain abe 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 8% higher than forecast? what is the NPV if revenues are 8% lower than forecast? The NPVof this project if revenues are 8% higher than forecast is S 53.97 decimal places.) million (Round to two