You are a manager at Northern Fibre, which is considering expanding its operations in synthetic libre manufacturing Your boss comes into your office, drops a consultant's report on your desk, and complains. "We owe these consultants $16 million for this report and I am not sure their analysis makes sense Before we Spend the $15 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 33 000 33.000 33 000 33 000 - Cost of goods sold 19 800 19 800 19 800 19.800 Gross profit 13 200 13 200 13 200 13 200 - General Sales and administrative expenses 1 200 1 200 1 200 1 200 - Depreciation 1.500 1 500 1500 1500 = Net operating income 10.5000 105000 10 5000 10 5000 - Income tax 3 675 3 675 3.675 3.675 Not income 6825 6825 6 825 6 825 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 CRA allows a CCA rate of 45% on the equipment for tax purposes The report concludes that because the project will increase oamings by $6.825 million per year for ten years, the project is worth 568 25 million You think back to your glory days in finance class and realize there is more work to be donel 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 0), which will be fully recovered in year 10 Next you see they have attributed 51 2 million of soling, general and administrative expenses to the project but you know that 50.6 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 right thing to focus ont If the cost of capital for this project is 169 what is your estimate of the value of the new project b. If the cost of capital for this project is 16% what is your estimate of the value of the new project? Value of project = 5 milion (Round to three decimal places)