Please SHOW YOUR WORK

You are a manager at Permeable Fiber, which is considering adding a new product line. Your boss said to you "We already owe these consultants $1.1 million, and all they estimated is Net Income. Before we spend $32 million on new equipment for this project, look the report over and give me your opinion." Here are the report's estimates (in millions of dollars; note that the question is continued below, so you need to scroll down to see it all): 1 2 Sales revenue 77.0 77.0 - Cost of goods sold 42.0 42.0 Gross profit 35.0 35.0 -Selling, gen. & admin. exp. 4.0 4.0 -Depreciation 16.0 16.0 Net operating income 15.0 15.0 - Income tax 4.1 4.1 Net Income 11.0 11.0 Everything that the consultants have calculated is correct, as far as it goes. The project will require $25 million in working capital upfront (year 0), which will be fully recovered in the last year of the project (year 2). The first relevant period's FCF is: The second relevant period's FCF is: The third relevant period's FCF (if any) is