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 $1.6 million for this report, and I am not sure their analysis makes sense. Before we spend the $29.9 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 2 910 Sales Revenue 25.000 25.000 25.000 25.000 - Cost of Goods Sold 15.000 15.000 15.000 15.000 = Gross Profit 10.000 10.000 10.000 10.000 - General, Sales and Administrative Expenses 2.392 2.392 2.392 2.392 - Depreciation 2.990 2.990 2.990 2.990 = Net Operating Income 4.618 4.618 4.618 4.618 - Income Tax 1.616 1.616 1.616 1.616 = Net Income 3.002 3.002 3.002 3.002 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 $-29 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 $1 million. (Round to three decimal places.) b. If the cost of capital for this project is 8%, what is your estimate of the value of the new project? If the cost of capital for this project is 8%, 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 $1.6 million for this report, and I am not sure their analysis makes sense. Before we spend the $29.9 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 2 910 Sales Revenue 25.000 25.000 25.000 25.000 - Cost of Goods Sold 15.000 15.000 15.000 15.000 = Gross Profit 10.000 10.000 10.000 10.000 - General, Sales and Administrative Expenses 2.392 2.392 2.392 2.392 - Depreciation 2.990 2.990 2.990 2.990 = Net Operating Income 4.618 4.618 4.618 4.618 - Income Tax 1.616 1.616 1.616 1.616 = Net Income 3.002 3.002 3.002 3.002 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 $-29 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 $1 million. (Round to three decimal places.) b. If the cost of capital for this project is 8%, what is your estimate of the value of the new project? If the cost of capital for this project is 8%, the value of the project is $ million. (Round to three decimal places.) You accept the project. (Choose from the drop-down menu.)