You are a manager at Northern Fiber, which is considering expanding its operations in synthetic fiber manufacturing. Your boss comes into your office, drops a consultant's report on your desk, and complains, "We owe these consultants $1.1 million for this report, and I am not sure their analysis makes sense. Before we spend the $22 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):

	Project Year
Earnings Forecast ($000,000s)	1	2		9	10
Sales Revenue	34.000	34.000		34.000	34.000
- COGS	20.400	20.400		20.400	20.400
= Gross profit	13.600	13.600		13.600	13.600
- Selling, general and administrative expenses	1.760	1.760		1.760	1.760
- Depreciation	2.200	2.200		2.200	2.200
= Net Operating Income	9.6400	9.6400		9.6400	9.6400
- Income Tax	3.374	3.374		3.374	3.374
= Net Income	6.266	6.266		6.266	6.266

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 $6.266 million per year for ten years, the project is worth $62.66 million.

First, you note that the consultants have not factored in the fact that the project will require $8 million in working capital upfront (year 0), which will be fully recovered in year 10. Next, you see they have attributed $1.76 million of selling, general and administrative expenses to the project, but you know that $0.88 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!

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?

Free Cash Flows (Years 0-10)
Year	Free Cash Flows
0
1
2
3
4
5
6
7
8
9
10

Thank you in advance.