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 $1.4 million for thisreport, and I am not sure their analysis makes sense. Before we spend the $22 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):(Click on the following icon in order to copy its contents into aspreadsheet.)

Project Year Earnings Forecast ($ million) 1 2 9 10 Sales revenue 27.000 27.000 27.000 27.000 - Cost of goods sold 16.200 16.200 16.200 16.200 = Gross profit 10.800 10.800 10.800 10.800 - Selling, general, and administrative expenses 1.760 1.760 1.760 1.760 - Depreciation 2.200 2.200 2.200 2.200 = Net operating income 6.840 6.840 6.840 6.840 - Income tax 1.368 1.368 1.368 1.368 = Net unlevered income 5.472 5.472 5.472 5.472