XP 9-31 (book/static) Question Help You le manager at Percolated Fiber, which is considering expanding its operations in synthetic fiber manufacturing. Your boss comes to your office drops a consultant's report on your desk, and complains, "We owe these constants 51.7 million for this report, and I am not sure the analysis makes sense Before we spend the $213 million on now equipment needed for this project. look it over and give me your opinion. You open the report and find the following estimates in milions of dollars Project Year Earnings Forecast 1 2 9 10 Sales Revenue 29.000 29.000 29.000 29.000 - Cost of Goods Sold 17.400 17.400 17.400 17.400 -Gross Profit 11.000 11.600 11.600 11,000 -General Sales and Administrative Expenses 1.704 1,704 1704 1,704 -Depreciation 2.130 2.130 2130 2130 Not Operating income 7.766 7.766 7.768 7.766 - Income Tax 2.718 2.718 2718 2.718 a. Given the available Wormation, what are the free cash flows in yours through 10 at should be used to evaluate the proposed project The free cash flow for year is min (Round to three decimal places) Enter your answer in the answer box and then click Chick Answer parts reining 0 SYL * F 17 FF Y A / 2 3 C $ 4 6 8 9 7 5 2 } C 1 U T R Y W L J H G D S A . Question Help -Depreciation 2.130 2.130 2.130 2.130 = Net Operating Income 7.766 7.766 7.786 - Income Tax 7.706 2.718 2.718 2718 2.718 = Net Income 5.048 5.048 5.048 5048 All of the estimates in the report sem correct. You note that the consultantsused straight-line depreciation for the new equipment that will be purchased today year ol which is what the accounting department recommended. They also calculated the depreciation alming no salvage value for the equipment. The report concludes that because the project will increase earnings by $5.048 million per year for 10 years, the project is worth $50.48 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 $123 million in working capital up front year which will be y recovered in yew to Next you see they have atributed $1,704 million of seling, general, and administrative expenses to the project, but you know that $0.952 million of this amount is overhead that will be nourred even the project is not accepted. Finally, you know that accounting earnings are not the right thing to focus on a. Given the available information, what are the free cash flows in yours through 10 that should be used to evaluate the proposed project? b. W the cost of capital for this project is 10%, what is your estimate of the value of the new project? a. Given the available information, what are the tree cash flow in years through 10 that should be used to evaluate the proposed project? The tree cash flow for years million (Round to three decimal places) Enter your answer in the answer box and then click Check Answer parts remaining 88 26 FB - A 1 $ 4 1 0 %23 3 * & 7 9 8 6 2 1 li U Y T T E Q R W L G H S D Yound which is normandocung Your Comes to you for sport on your mind ention this wa walionewed 263 we prowlook andere you med en milions dan 000 17,400 tuning Focal 1 2 29000 25000 Com 1740017400 OM 1000 1100 - Gewand 1704 1704 -D 21 213 2713210 www.hehen The wonder 3 200 17:40 11600 1704 2930 33 31 4 YP - 3 . 8 1 0 1 5 6 7 9 D. W E R T Y U 1 O - 1 A S D F G H J K L . : V V Z X C V B N M ? 1 + . al utrol option Command Command option - 2.130 2.130 2130 2.130 Og noor 7.76 7.766 7.16 2. Tad 2718 2718 2718 2718 SBB 5.048 Ahora contine rechewwert will be purchased today year with what the depan They called the deacution group for the ment Theot conducted by 5508 vion per yearly years, worn in Youthin two gory days in and more work to be Pessoa pode $12 Wolicy wiely recovered anywa 10 Must you at they have 30 singer and the prod, but you know the amount will be moment proceed Fray you know www.watnym wewe te proposed www.centro Tweets wat 4 Become 2 1 2 3 5 4 5 6 7 B 9 1 Q w E R Y U O P A S D F G H Z X V B M N ? 1 90 an 3 option command Command option