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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 $1.5 million for this report, and I am not sure their analysis makes sense. Before we spend the $20 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)
\table[[,1,2,9,10],[Sales revenue,34.000,34.000,34.000,34.000],[- Cost of goods sold,20.400,20.400,20.400,20.400],[= Gross profit,13.600,13.600,13.600,13.600],[- General, sales, and administrative expenses,1.600,1.600,1.600,1.600],[- Depreciation,2.000,2.000,2.000,2.000],[= Net operating income,10.0000,10.0000,10.0000,10.0000],[- Income tax,3.5,3.5,3.5,3.5,
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