You are a manager at PercolatedFiber, which is considering expanding its operations in synthetic fiber manufacturing. Your boss comes into youroffice, drops aconsultant's report on yourdesk, andcomplains, "We owe these consultants $ 1.6 million for thisreport, and I am not sure their analysis makes sense. Before we spend the $ 29.7 million on new equipment needed for thisproject, look it over and give me youropinion." You open the report and find the following estimates(in millions ofdollars):

Earnings Forecast Sales Revenue - Cost of Goods Sold = Gross Prot - General, Sales and Administrative Expenses - Depreciation = Net Operating Income - Income Tax = Net Income 25.000 15.000 10.000 2.376 2.970 4.654 1 .629 3.025 Project Year 2 25.000 15.000 10.000 2.376 2.970 4.654 1 .629 3.025 25.000 15.000 10.000 2.376 2.970 4.654 1.629 3.025 10 25.000 15.000 10.000 2.376 2.970 4.654 1 .629 3.025