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You are a manager at Northern Fibre, which is considering expanding its operations in synthetic fibre manufacturing. Your boss comes into your ollice, drops consultant's

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You are a manager at Northern Fibre, which is considering expanding its operations in synthetic fibre manufacturing. Your boss comes into your ollice, drops consultant's report on your desk, and complains, We owe these consultants $1.6 million for this report, and I am not sure their analysis makes sense. Before w spend the $28 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 29 000 29.000 29.000 29.000 -Cost of goods sold 17.400 17.400 17.400 17.400 Gross profit 11.600 11.600 11 600 11 600 -General, sales, and administrative expenses 2 240 2240 2.240 2 240 Depreciation 2 800 2.800 2 800 2 800 = Net operating income 6.5600 6.5600 6.5600 6.5600 -Income tax 2296 2296 2.296 2.296 75 b. If the cost of capital for this project is 10%, what is your estimate of the value of the new project? Value of projects milion (Round to three decimal places.) ng You are a manager at Northem Fibre, which is considering expanding its operations in synthetic fibre manufacturing Your boss come to your off consultant's report on your desk, and complains, We owe these consultants $1.6 million for this report, and I am not sure their analysis massen spend the $16 million on new equipment needed for this project look it over and give me your opinion." You open the report and find the following millions of dollars) Sales revenue -Cost of goods sold Gross proft - General sales and administrative expenses Depreciation Net operating Income -Income tax 1 30.000 18.000 12.000 1.200 1.500 9.300 3.255 2 30.000 18.000 12 000 1 200 1.500 9 300 3.255 9 30 000 18.000 12.000 1.200 1.500 9.300 3 255 10 30.000 18.000 12.000 1.200 1.500 9.300 3.255 a. Given the available information, what are the free cash flows in years through 10 that should be used to evaluate the proposed project? 0 The tree cash flow for year is smilion (Round to three decimal places, and enter a decrease as a negative number.)

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