Please solve for the estimated value of project if the cost of capital is 13%

Problem 9 - 17 b Question Help You are a manager at Northern Fibre , which which is considering expanding its op erations in synthetic fibre manufacturing . Y our boss comes into your office , drops a consultant's report on your desk , and complains " We owe These consultants 51 9 million for this report , and I am not sure their analys their analysis makes sense . Before we spend the 517 million on new equipment needed for and give me your opinion equipment needed for this project , look it over and give me you You open the report and find the following estimates (in millions of dollars ) Project Year Earnings Forecast ( 5000 0005 ) Sales revenue 33.000 33.000 33 000 33000 Cost of goods sold 19.800 19.800 19800 19.800 Gross profit 3. 200 13.200 3. 200 13.200 General , sales , and administrative expenses 360 360 360 360 Depreciation 1700 1700 1 700 1 700 Net operating income 10.1400 10.1400 10 1400 101400 Income tax 549 3 549 3. 549 3 549- Income tax 3.549 3.549 3.549 3.549 = Net income 6.591 6.591 6.591 6.591 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 of 20% on the equipment for tax purposes. The report concludes that because the project will increase earnings by $6.591 million per year for ten years, the project is worth $65.91 million. 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 $10 million in working capital up front (year 0), which will be fully recovered in year 10. Next, you see they have attributed $1.36 million of selling, general and administrative expenses to the project, but you know that $0.68 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! b. If the cost of capital for this project is 13%, what is your estimate of the value of the new project? b. If the cost of capital for this project is 13%, what is your estimate of the value of the new project? Value of project = $million (Round to three decimal places.)