{ "key_pair_value_system": true, "answer_rating_count": "", "question_feedback_html": { "html_star": "", "html_star_feedback": "" }, "answer_average_rating_value": "", "answer_date_js": "2024-09-13T06:07:59-04:00", "answer_date": "2024-09-13 06:07:59", "is_docs_available": "", "is_excel_available": "", "is_pdf_available": "", "count_file_available": 0, "main_page": "student_question_view", "question_id": "10602511", "url": "\/study-help\/questions\/you-are-a-manager-at-northem-fibre-which-is-considering-10602511", "question_creation_date_js": "2024-09-13T06:07:59-04:00", "question_creation_date": "Sep 13, 2024 06:07 AM", "meta_title": "[Solved] You are a manager at Northem Fibre, which | SolutionInn", "meta_description": "Answer of - You are a manager at Northem Fibre, which is considering expanding its operations in synthetic fibre manufacturing. Yo | SolutionInn", "meta_keywords": "manager,northem,fibre,expanding,operations,synthetic,manufacturing,boss,office,drops,consultant,s", "question_title_h1": "You are a manager at Northem Fibre, which is considering expanding its operations in synthetic fibre manufacturing. Your boss comes into your office, drops a", "question_title": "You are a manager at Northem Fibre, which is considering expanding its", "question_title_for_js_snippet": "You are a manager at Northem Fibre, which is considering expanding its operations in synthetic fibre manufacturing Your boss comes into your office, drops a consultant's report on your desk, and complains, We owe these consultants S1 1 million for this report, and I am not sure their analysis makes sense Before we spend the $29 million on new equipment needed for this project, look it over and give me your opinion You open the report and find the following estimates (in millions of dollars) 1 2 9 10 Sales revenue 32 000 32 000 32 000 32 000 Cost of goods sold 19 200 19 200 19 200 19 200 Gross profit 12 800 12 800 12 800 12 800 General, sales, and administrative expenses 2 320 2 320 2 320 2 320 Depreciation 2 900 2 900 2 900 2 900 Net operating income 7 580 7 580 7 580 7 580 Income tax 2 653 2 653 2 653 2 653 Net Income 4 927 4 927 4 927 4 927 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 o) which is what the accounting department recommended for financial reporting purposes CRA allows a CCA rate of 45 on the equipment for tax purposes The report concludes that because the project will increase earnings by $4 927 million per year for 10 years, the project is worth $49 27 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 514 million in working capital up front (year o), which will be fully recovered in year 10 Next you see they have attributed $2 32 million of selling, general and administrative expenses to the project, but you know that $1 16 million of this amount is overhead that will be incurred even if the project is not accepted Finally, you know that accounting earings are not the night thing to focus on a Given the available information, what are the free cash flows in years 0 through 10 that should be used to evaluate the proposed project a Given the available information, what are the free cash flows in years through 10 that should be used to evaluate the proposed project The free cash flow for year is $ million (Round to three decimal places, and enter a decrease as a negative number )", "question_description": "

\"image<\/p> You are a manager at Northem Fibre, which is considering expanding its operations in synthetic fibre manufacturing. Your boss comes into your office, drops a consultant's report on your desk, and complains, \"We owe these consultants S1.1 million for this report, and I am not sure their analysis makes sense. Before we spend the $29 million on new equipment needed for this project, look it over and give me your opinion.\" You open the report and find the following estimates (in millions of dollars) 1 2 9 10 Sales revenue 32.000 32.000 32.000 32.000 -Cost of goods sold 19.200 19.200 19.200 19.200 = Gross profit 12.800 12.800 12.800 12.800 - General, sales, and administrative expenses 2.320 2.320 2.320 2.320 -Depreciation 2.900 2.900 2.900 2.900 = Net operating income 7.580 7.580 7.580 7.580 - Income tax 2.653 2.653 2.653 2.653 = Net Income 4.927 4.927 4.927 4.927 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 o) which is what the accounting department recommended for financial reporting purposes. CRA allows a CCA rate of 45% on the equipment for tax purposes. The report concludes that because the project will increase earnings by $4.927 million per year for 10 years, the project is worth $49.27 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 514 million in working capital up front (year o), which will be fully recovered in year 10. Next you see they have attributed $2.32 million of selling, general and administrative expenses to the project, but you know that $1.16 million of this amount is overhead that will be incurred even if the project is not accepted. Finally, you know that accounting earings are not the night thing to focus on! a. Given the available information, what are the free cash flows in years 0 through 10 that should be used to evaluate the proposed project? a. Given the available information, what are the free cash flows in years through 10 that should be used to evaluate the proposed project? The free cash flow for year is $ million (Round to three decimal places, and enter a decrease as a negative number.)", "transcribed_text": "", "related_book": { "title": null, "isbn": null, "edition": null, "authors": null, "cover_image": null, "uri": null, "see_more_uri": "" }, "free_related_book": { "isbn": "", "uri": "", "name": "", "edition": "" }, "question_posted": "2024-09-13 06:07:59", "see_more_questions_link": "\/study-help\/questions\/business-business-communication-2023-February-20", "step_by_step_answer": "The Answer is in the image, click to view ...", "students_also_viewed": [ { "url": "\/study-help\/business-communication-process-\/18-order-sentences-into-a-logical-paragraph-nicks-pizza-place-2003755", "description": "18. Order sentences into a logical paragraph (Nicks Pizza). Place a number (from 1 to 8) next to each sentence to represent its position within the paragraph. 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