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Shier indusiries is a farm implement manuticturet. Management is currenty evaluatng a proposal to bulld a plant that will manulacture ightweight tractors. Butiler plans to

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Shier indusiries is a farm implement manuticturet. Management is currenty evaluatng a proposal to bulld a plant that will manulacture ightweight tractors. Butiler plans to use a cost of capial c 2% to evaluate this project. Based on extensive research, it has pregared the following incomplese incremental free cash fow projections (in millions of dollars). The relevart CCA rale for the capital expenditures is 20%. Assume assets are never soid. a. For this base-case sconario, what is the NPV of the plant to manufacture lightweight tractors? b. Based on input from the marketing department, Bubler is uncertain about its revenue forecast. In parficula, management would like to examine the senelivity of the NPV to the revenue assarnotions. 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? Using the indirect method requires a separale calculaton of the CCA tax shield: What is the present value of the CCA tax shield? The present value of the CCA tax shield is I milion. (Round to bwo decimat places.)

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