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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
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 $1.7 million for this report, and I am not sure their analysis makes sense. Before we spend the $28.3 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 10 Earnings Forecast Sales Revenue - Cost of Goods Sold = Gross Profit - General, Sales and Administrative Expenses - Depreciation = Net Operating Income - Income Tax = Net Income 30.000 18.000 12.000 2.264 2.830 Project Year 2 30.000 18.000 12.000 2.264 2.830 6.906 2.417 4.489 9 30.000 18.000 12.000 2.264 2.830 6.906 2.417 4.489 30.000 18.000 12.000 2.264 2.830 6.906 2.417 4.489 6.906 2.417 4.489 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.)
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