Reference no: EM133057341

You are a manager at Northern Fibre. which is considering expanding its operations in synthetic ?bre manufacturing. Your boss comes into your of?ce, drops a consultant's report on your desk, and complains, "We owe these consultants $1.2 million for this report, and I am not sure their analysis makes sense. Before we spend the $20 million on new equipment needed for this project, look it over and give me your opinion." You open the report and ?nd the following estimates (in millions of dollars): 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 pro?t 12.000 12.000 12.000 12.000 - General, sales, and administrative expenses 1.600 1.600 1.600 1.600 - Depreciation 2.000 2.000 2.000 2.000 = Net operating income 8.400 8.400 8.400 8.400 - Income tax 2.94 2.94 2.94 2.94 = Net income 5.460 5.460 5.460 5.460 a. Given the available information, what are the free cash ?ows in years 0 through 10 that should be used to evaluate the proposed project? The free cash ?ow for year 0 is $ - 34' million. (Round to three decimal places, and enter a decrease as a negative number.) The free cash ?ow for year 1 is $ 8.331)V million. (Round to three decimal places, and enter a decrease as a negative number.) The free cash ?ow for year 2 is $ 9.065V million. (Round to three decimal places, and enter a decrease as a negative number.) The free cash ?ow for year 3 is $ million. (Round to three decimal places, and enter a decrease as a negative number.)