Question: Assume that in the original Ityesi example in Table EE, all sales actually occur in the United States and are projected to be $64.3 million

Assume that in the original Ityesi example in Table EE, all sales actually occur in the United States and are projected to be

Assume that in the original Ityesi example in Table EE, all sales actually occur in the United States and are projected to be $64.3 million per year for four years. Keeping other costs the same, calculate the NPV of the investment opportunity. Assume the WACC is 6.8%. The forward exchange rates are given below. Year 2 3 4 Forward Exchange Rate (/) 1.5393 158951.5822 14151 1.5048 Calcualte the cash flows below: (Round to three decimal places. Forward exchange rates must be rounded to four decimal places.) Year Free cash flow (millons of pounds) Forward exchange rate Free cash flow (millons of dollars) Sales in the US (millons of dollars) Cash flow (millons of dollars) Incremental Earnings Forecast (E millions) 1 Sales 2 Cost of Goods Sold 3 Gross Profit 4 Operating Expenses 5 Depreciation 6 EBIT 7 Income tax at 40% 8 Unlevered Net Income Free Cash Flow 9 Plus: Depreciation 37.500 37500 37500 37.500 (15.625) (15.625) (15.625) (15.625) 21.875 21.875 21.875 21.875 (4.167) (5.625) 5.625) 5.625) 5.625) (3.750 (3.750 (3.750) (3.750) (4.167) 12.500 12.500 12.500 2.500 1.667 5.000 (5.000) (5.000) (5.000) 2.500 7500 7500 7500 7500 3.750 3.750 3.750 3.750 (15.000) 10 Less: Capital Expenditures 11 Less: Increases in NWC 12 Pound Free Cash Flow (17.500) 11.250 11.250 11.250 11.250

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