Question Help 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 $10 million for this report, and I am not sure their analysis makes sense. Before we spend the $250 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 30.000 30 000 30 000 30.000 Cost of Goods Sold 18 000 18 000 18.000 18 000 Gross Profit 12 000 12000 12000 12 000 - General Sales and Administrative Expenses 2.000 2 000 2000 2000 -Depreciation 2.500 2 500 2500 2500 -Net Operating Income 7.500 7.500 7500 7500 a. Given the available information, what are the tree cash Bows in years through 10 that should be sned to evaluate the proposed project? The free cash flow for year is $400 million (Round to the decimal places) Homework: Capital Budgeting in Excel Homework Sa Score: 0 of 8 pts 10f 1 (0 complete) HW Score: 0% 0 of 8 P 9-31 (book/static-Hidden) Question Help = Net Operating Income 7.500 7.500 7.500 7.500 - Income Tax 2625 2625 2625 2 625 = Net Income 4.875 4.875 4875 4.875 All of the estimates in the report seem correct You note that the consultants used straight-line depreciation for the new equipment that will be purchased today (year 0), which is what the accounting department recommended. They also calculated the depreciation assuming no salvage value for the equipment. The report concludes that because the project will increase earnings by 54 875 million per year for 10 years, the project is worth 548 75 million You think back to your glory days in finance class and realize there is more work to be done! First, you note that the consultants have not included the fact that the project will require 510.0 million in working spital up front year)which will be fully recovered in year 10. Next, you see they have attributed $2.000 million of seling, general, and administrative expenses to the project , but you know that $1.000 milion of this amount is overhead that will be incurred even if the project is not accepted. Finally, you know that accounting earnings are not the right thing to focus a. Given the available information, what are the free cash flows in years through 10 that should be used to evaluate the proposed project? b. If the cost of capital for this project is 14%, what is your estimate of the value of the new project? a. Given the available information, what are the free cash flow in years through 10 that should be used to evaluate the proposed project? The free cash flow for year is $40.0 million (Round to three decimal places onl