A. Given the available information, what are the free cash flows in years 0 through 10 that should be used to evaluate the proposed project?

The free cash flow for year 0 is $________ million.(Round to three decimal places.)

The free cash flow for years 1 to 9 is $_______ million.(Round to three decimal places.)

The free cash flow for year 10 is $______ million.(Round to three decimal places.)

B.If the cost of capital for this project is 15%, what is your estimate of the value of the new project?

If the cost of capital for this project is 15%, the value of the project is $_________ million.(Round to three decimal places.)

You should or should not accept the project?

You are a manager at Percolated Fiber, which is considering expanding its operations in synthetic fiber manufacturing. Your boss comes into your office, drops a consultant's report on your desk, and complains, "We owe these consultants $1.2 million for this report, and I am not sure their analysis makes sense. Before we spend the $17.5 million on new equipment needed for this project, look it over and give me your opinion." You open the report and find the following estimates in millions of dollars): Project Year Earnings Forecast 1 2 9 10 Sales Revenue 28.000 28.000 28.000 28.000 - Cost of Goods Sold 16.800 16.800 16.800 16.800 = Gross Profit 11.200 11.200 11.200 11.200 - General, Sales and Administrative Expenses 1.400 1.400 1.400 1.400 - Depreciation 1.750 1.750 1.750 1.750 = Net Operating Income 8.050 8.050 8.050 8.050 - Income Tax 2.818 2.818 2.818 2.818 You are a manager at Percolated Fiber, which is considering expanding its operations in synthetic fiber manufacturing. Your boss comes into your office, drops a consultant's report on your desk, and complains, "We owe these consultants $1.2 million for this report, and I am not sure their analysis makes sense. Before we spend the $17.5 million on new equipment needed for this project, look it over and give me your opinion." You open the report and find the following estimates in millions of dollars): Project Year Earnings Forecast 1 2 9 10 Sales Revenue 28.000 28.000 28.000 28.000 - Cost of Goods Sold 16.800 16.800 16.800 16.800 = Gross Profit 11.200 11.200 11.200 11.200 - General, Sales and Administrative Expenses 1.400 1.400 1.400 1.400 - Depreciation 1.750 1.750 1.750 1.750 = Net Operating Income 8.050 8.050 8.050 8.050 - Income Tax 2.818 2.818 2.818 2.818