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 $1.2 million for this report, and I am not sure their analysis makes sense. Before we spend the $18.4 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): Project Year Earnings Forecast 1 2 9 10 Sales Revenue 26.000 26.000 26.000 26.000 - Cost of Goods Sold 15.600 15.600 15.600 15.600 = Gross Profit 10.400 10.400 10.400 10.400 - General, Sales and Administrative Expenses 1.472 1.472 1.472 1.472 - Depreciation 1.840 1.840 1.840 1.840 = Net Operating Income 7.088 7.088 7.088 7.088 - Income Tax 2.481 2.481 2.481 2.481 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? The free cash flow for year 0 is $ million. (Round to three decimal places.) The free cash flow for years 1 to 9 is $ million. (Round to three decimal places.) The free cash flow for year 10 is $ million. (Round to three decimal places.) b. If the cost of capital for this project is 12%, what is your estimate of the value of the new project? If the cost of capital for this project is 12%, the value of the project is $ million. (Round to three decimal places.) You accept the project. (Choose from the drop-down menu.) 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 $1.2 million for this report, and I am not sure their analysis makes sense. Before we spend the $18.4 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): Project Year Earnings Forecast 1 2 9 10 Sales Revenue 26.000 26.000 26.000 26.000 - Cost of Goods Sold 15.600 15.600 15.600 15.600 = Gross Profit 10.400 10.400 10.400 10.400 - General, Sales and Administrative Expenses 1.472 1.472 1.472 1.472 - Depreciation 1.840 1.840 1.840 1.840 = Net Operating Income 7.088 7.088 7.088 7.088 - Income Tax 2.481 2.481 2.481 2.481 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? The free cash flow for year 0 is $ million. (Round to three decimal places.) The free cash flow for years 1 to 9 is $ million. (Round to three decimal places.) The free cash flow for year 10 is $ million. (Round to three decimal places.) b. If the cost of capital for this project is 12%, what is your estimate of the value of the new project? If the cost of capital for this project is 12%, the value of the project is $ million. (Round to three decimal places.) You accept the project. (Choose from the drop-down menu.)