Question: answer part A & B for a like Amold inc. is considering a proposal to manufacture high-end protein bars used as food supplements by body
Amold inc. is considering a proposal to manufacture high-end protein bars used as food supplements by body builders. The project requires use of an existing warehouse, which the firm acquired three years ago for \\( \\$ 2 \\) million and which it currently rents out for \\( \\$ 108,000 \\). Rental rates are not expocted to change going forward. In addition to using the warehouse, the project requires an upfront investment into machines and other equipment of \\( \\$ 1.3 \\) million. This investment can be fully depreciated straight-line over the next 10 years for tax purposes. However, Arnold Ince expects to terminate the project at the end of eight years and to sell the machines and equipment for \\( \\$ 564,000 \\). Finally, the project requires an initial investment into net working capital equal to \10 of predicted first-year sales. Subsequently, net working capital is \10 of the predicted saies over the following year. Sales of protein bars are expected to be \\( \\$ 4,9 \\) million in the first year and to stay constant for eight years. Total manulacturing costs and operating expenses (excluding depreciation) are \80 of sales, and profits are taxed at \30. a. What are the free cash flows of the project? b. If the cost of capital is \15, what is the NPV of the project? a. What are the free cash flows of the project? The FCF for yoar 0 is \\( \\$ \\) million. (Round to three decimal places.) The FCF for years \\( 1-7 \\) is \\( \\$ \\) million. (Round to three decimal places.) The FCF for year 8 is \\( \\$ \\) million. (Round to three decimal places) b. If the cost of capital is \15, what is the NPV of the project? The NPV of the project is \\( \\$ \\) million. (Round to three decimal places.)
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