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You are a manager at Persimmon Production which is considering adding a new product line. Your boss said to you Wo a heady owe these

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You are a manager at Persimmon Production which is considering adding a new product line. Your boss said to you "Wo a heady owe these consultants $1.2 mailion, and al they estmated is Net Income. Before we spend $36 million on new equipment for this project, look the report over and give me your opinion." Here are the report's estmates (in millions of doliars, note that the question is continued below, so you need to seroll down to see it all): Everything that the consultants hove calculated is correct, as far as a goes. The peoject will require $7 million in working capital uptront (year 0 ), which will be fully recovered in the last year of the project (year 2). The project will usilize other equipment that the consultants did not value separalely because the equipment is already owned and not being used in other projects. You know that the equipment could instead be donated to a charity, for a tax benefit of $5 million (in other words, this is the total amount that your taxes would decrease by in petiod 0 , if you donated the equipment rather than using is for the project). Or, a second aternative is that the equipment could instend be sold for an aflec-tax beceif of $0.7 milion (in dellars today). What are the correct tree cash fows (FCFs) to be tsed when evaluating this project? Report them in millions of dollars, not in dollars. Note that the answer is NoT the NPV, but the incremental FCFs needed for each relevant period. [Nole: Please show your work for the posaibilify of partial credit. Briefly show your cakulations but do not explain them except to label the numbers you give. By labeis, I mean column and row headings such as "Deprecintion" or "Year 2), and make it clear whether you are adding or subtracting Prd prefer that you keep the collumrirow formatting of the earlier calculations. Do NOT repeat the numbers before Net Income - uut show the calculations after that, to get the fral FCFs for each period ! The first relovant period's FCF is The socond relevant period' FCF is: The third rolevant periods FCF (If any) is

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