Problem 9-18ab Question Help Burier industries is a farm implement manufacturer Management is currently evaluating a proposal to build a plant that wil manufacture lightweight tractors Burier plans to use a cost of crotal of 12o evaluate this project Based on extensive research, it has prepared the following incomplete incremental free cash flow projections on mions of dollars) Free Cash Flow (5000.000 Year Years 1-0 Year 10 Revenues 11600 110700 - Manufacturing expenses (other man depreciation) - 3400 - 3400 - Marketing expenses - 12.00 - 12.00 - CCA = EBIT - Taxes (255) 2 Unlevered net income 2 - CCA - Increases in networking capital :-500 - 500 - Capital expenditures 145.00 Using the indirect method requires a separate calculation of the CCA taxshield What is the present value of the CCA a shield? The present vue of the CCA taxshield istmoon (Round to two decimal places 11 00 = EBIT Taxes (35% = Unlevered net income 2 - CCA 2 - Increases in het woring capital -500 -5.00 - Capital expenditures - 145.00 Continuation value Free cash flow - 145.00 The relevant CCA rate for the capital expenditures is 10%. Assume assets are never sold a. For this base-case scenario, what is the NPV of the plant to manufacture lightweight tractors? b. Based on input from the marketing department, Buhler is uncertain about its revenue forecast in particular management would like to examine the sensitivity of the NPV to the revenue assumptions What is the NPV of this project if revenue are 10% higher than forecast? What is the NPV of this project of revenues are 10% lower than forecast? Using the indirect method requires a separate calculation of the CCA tax Shield What is the present value of the CCA tax shield? The present value of the CCA tax shield is million (Round to two decima puces Problem 9-18ab Question Help Burier industries is a farm implement manufacturer Management is currently evaluating a proposal to build a plant that wil manufacture lightweight tractors Burier plans to use a cost of crotal of 12o evaluate this project Based on extensive research, it has prepared the following incomplete incremental free cash flow projections on mions of dollars) Free Cash Flow (5000.000 Year Years 1-0 Year 10 Revenues 11600 110700 - Manufacturing expenses (other man depreciation) - 3400 - 3400 - Marketing expenses - 12.00 - 12.00 - CCA = EBIT - Taxes (255) 2 Unlevered net income 2 - CCA - Increases in networking capital :-500 - 500 - Capital expenditures 145.00 Using the indirect method requires a separate calculation of the CCA taxshield What is the present value of the CCA a shield? The present vue of the CCA taxshield istmoon (Round to two decimal places 11 00 = EBIT Taxes (35% = Unlevered net income 2 - CCA 2 - Increases in het woring capital -500 -5.00 - Capital expenditures - 145.00 Continuation value Free cash flow - 145.00 The relevant CCA rate for the capital expenditures is 10%. Assume assets are never sold a. For this base-case scenario, what is the NPV of the plant to manufacture lightweight tractors? b. Based on input from the marketing department, Buhler is uncertain about its revenue forecast in particular management would like to examine the sensitivity of the NPV to the revenue assumptions What is the NPV of this project if revenue are 10% higher than forecast? What is the NPV of this project of revenues are 10% lower than forecast? Using the indirect method requires a separate calculation of the CCA tax Shield What is the present value of the CCA tax shield? The present value of the CCA tax shield is million (Round to two decima puces