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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 office, drops a
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 $1.3 million for this report, and I am not sure their analysis makes sense. Before we spend the $21 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): Sales revenue - Cost of goods sold = Gross profit General, sales, and administrative expenses - Depreciation = Net operating income - Income tax 1 1 29.000 17.400 11.600 1.680 2.100 7.820 2.737 2 29.000 17.400 11.600 1.680 2.100 7.820 2.737 9 9 29.000 17.400 11.600 1.680 2.100 7.820 2.737 10 29.000 17.400 11.600 1.680 2.100 7.820 2.737 .. 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 The free cash flow for year is $ million. (Round to three decimal places, and enter a decrease as a negative number.) O
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