You are a Manager at Percolated Fiber, which is considering expanding its operations in synthetic fiber manufacturing.With your Group team accompanying you, your Boss, Mr. Moneypockets, asks you to come to his office, where he gives you a consultant's report and complains, "We owe these consultants $1 million for this report, and I am not sure their analysis makes sense.Before we spend the $25 million on new equipment needed for this project, look it over with your team and give me your opinion."You open the report and find the estimates at the bottom of page 268 (in your textbook).

a) given the available information, what are the free cash flows in years 0 through 10 that should be used to evaluate the project?

b) if the cost of capital for the project (that is, the WACC) is 13%, what is your estimate of the NPV for the new project?How does the IRR compare to the required WACC?Would you recommend to Mr. Moneypockets that this project be undertaken, and why?

c) what are some uncertainties in the FCFs that your team might see in these (presumed to be 100% correct) NPV and IRR metrics, that could cause them to not be as deterministic as you and your team are basically assuming in your presentation to Mr. Moneypockets?