You are a manager at Northern 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 $1.2 million for this report, and I am not sure their analysis makes sense. Before we spend the $30 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 27.000 27.000 27.000 27.000 - Cost of goods sold 16.200 16.200 16.200 16.200 =Gross profit 10.800 10.800 10.800 10.800 - General, sales, and administrative expenses 2.400 2.400 2.400 2.400 -Depreciation 3.000 3.000 3.000 3.000 = Net operating income 5.4000 5.4000 5.4000 5.4000 - Income tax 1.89 1.89 1.89 1.89 b. If the cost of capital for this project is 13%, what is your estimate of the value of the new project? Value of project = $million (Round to three decimal places.) One year ago, your company purchased a machine used in manufacturing for $105,000. You have learned that a new machine is available that offers many advantages and that you can purchase it for $160,000 today. The CCA rate applicable to both machines is 30%; neither machine will have any long-term salvage value. You expect that the new machine will produce earnings before interest, taxes, depreciation, and amortization (EBITDA) of $50,000 per year for the next 10 years. The current machine is expected to produce EBITDA of $23,000 per year. All other expenses of the two machines are identical. The market value today of the current machine is $50,000. Your company's tax rate is 45%, and the opportunity cost of capital for this type of equipment is 12%. Should your company replace its year-old machine? What is the NPV of replacement? The NPV of replacement is $. (Round to the nearest dollar.)