You are a manager at Percolated Fiber, which is considering expanding its operations in synthetic fiber manufacturing. Your boss comes into your office, drops a consultant's report on your desk, and complains, "We owe these consultants $1.600 million for this report, and I am not sure their analysis makes sense. Bofore we spend the $25.600 million on new equipment neoded for this project, look it over and give me your opinion." You open the report and find the following estimates (in millions of dollars); 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 dopartment recommended. They also calculatiod the depreciation assuming no salvage value for the equipment. The report concludes that because the projoct will increase earnings by $7.104 milion per year for 10 years, the project is worth $71.040 milion. You think back to your glory days in finance class and realize there is more work to be donel First, you note that the consuitants have not included the fact that the project will require $8.600 million in working capital up tront (year 0), which will be fully recovered in year 10 . Next, you see they have attributed \$2.048 milion of seling, general, and administrative expenses to the project, but you know that $1.024 million of this amount is overhead that will be incurred even if the project is not accepted. Finaly, you know that accounting eamings are not the right thing to focus onl a. Given the availabie information, what are the free cash flows in yoars 0 through 10 that should be used to evaluate the proposed project? b. If the cost of capital for this project is 12% what is your estimate of the value of the new project? (Click on the following icon in order to copy its contents into a spreadsheet.)