Exhibit 2 - Template for Free Cash Flow Statement and NWC Requirements Free Cash Flow Statement Year 0 1 2 3 4 5 6 7 8 Revenues/Sales Cannibalization Net Revenues Cost of Goods Sold SG&A Expenses R&D Expenses Depreciation EBIT Taxes NOPAT Depreciation Capital Expenditures Adjustments for Liq. values ANWC Free Cash Flow NWC Calculations Year 1 2 3 4 5 6 7 8 Acc. Receivables Inventory Acc. Payables NWC ANWCProject A: Solar-Powered Home Appliances: The life of the project is expected to be 5 years. After year 5 no further revenue will be generated from this project. The project requires an upfront (year 0) investment in new equipment for manufacturing of $10 million. The equipment will be depreciated using straight-line depreciation over five years, starting in year 1. The equipment will be sold for $2 million at the end of year 5. Revenues from the project are expected to be $15 million in year 1 and will grow by 5% annually thereafter. After year 5 no further revenue will be generated from this project. The introduction of this new product line will cannibalize revenues of the firm's other products by $1 million each year for years 1-5. Annual cost of goods sold are expected to be 55% of net revenues, and annual selling and general administrative expenses are expected to be 10% of net revenues. The project will require and upfront (year 0) investment in inventory of $2 million. Inventory requirements will grow by 5% annually thereafter. All remaining inventory will be used up by the end of year 5. The company has a policy of managing its accounts receivables and payables in a way that both its accounts receivable days and its accounts payables days are 30 days. The marginal tax rate of the company is 25%. The firm is profitable enough that it expects to offset any operating loss from this project against profits from other existing projects. The project is of average risk to the firm and the relevant discount rate (cost of capital) is 10%. To finance the project, the firm will use its retained earnings, ensuring that there are no interest expenses associated with this project.Produce a detailed free cash flow statement for Project A. Use a table similarto the one provided in the template in Exhibit 2 of this assignment for your calculations. (Since it's only a template you will have to make any necessary adjustments. This includes adding additional line items if necessary) Express all $-amounts in millions of dollars and round to two decimals