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 $15.1 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 27.000 16.200 10.800 1 .208 1.510 8.082 2.829 5.253 Project Year 2 27.000 16.200 10.800 1.208 1.510 8.082 2.829 5.253 27.000 16.200 10.800 1 .208 1.510 8.082 2.829 5.253 10 27.000 16.200 10.800 1 .208 1.510 8.082 2.829 5.253