TABLE 31.1 SPREADSHEET Expected Foreign Free Cash Flows from Ityesi's U.K. Project Year Incremental Earnings Forecast ( millions) 1 Sales 2 Cost of Goods Sold 3 Gross Profit 4 Operating Expenses 37500 37500 37500 37500 (15625) (15625) (15625) (15625) 21.875 21.875 21.875 21.875 (4.167) 5.625 (5.625) 5.625) (5.625) (3.750) (3.750) (3.750) (3.750) (4.167) 12.500 2.500 12.500 12.500 1667 (5.000) 5.000) (5.000) (5.000) 2.500 7500 7500 7500 7500 6 EBIT 7 Income tax at 40% 8 Unlevered Net Income Free Cash Flow 9 Plus: Depreciation 10 Less: Capital Expenditures 11 Less: Increases in NWC 3.750 3.750 3.750 3.750 (15.000) 12 Pound Free Cash Flow 17.500) 1.250 .250 11250 11.250 Assume that in the original Ityesi example in Table EE all sales actually occur in the United States and are projected to be $61.6 million per year for four years. Keeping other costs the same, calculate the NPV of the investment opportunity. Assume the WACC is 7.2%. The forward exchange rates are given below. Year Forward Exchange Rate (S/ 1.6577 15222 1.5633 5573 1.4282 4 Calcualte the cash flows below: (Round to three decimal places. Forward exchange rates must be rounded to four decimal places.) Year Free cash flow (millons of pounds) Forward exchange rate Free cash flow (millons of dollars) ] Sales in the US (millons of dollars) Cash flow (millons of dollars)