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 $1.3 million for this report, and I am not sure their analysis makes sense. Before we spend the $28.9 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 Sales Revenue -Cost of Goods Sold Gross Profit -General, Sales and Administrative Expenses -Depreciation Net Operating Income 29.000 17.400 11.600 2.312 2.890 6.398 2 29.000 17.400 11.600 2.312 2.890 6.398 9 10 29.000 29.000 17.400 17.400 11.600 11.600 2.312 2.312 2.890 2.890 6.398 6.398 D a. Given the available information, what are the free cash flows in years 0 through 10 that should be used to evaluate the proposed project? The free cash flow for year 0 is $ million. (Round to three decimal places.) The free cash flow for years 1 to 9 is $. million. (Round to three decimal places.)
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 $1.3 million for this report, and I am not sure their analysis makes sense. Before we spend the $28.9 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 Sales Revenue -Cost of Goods Sold Gross Profit -General, Sales and Administrative Expenses -Depreciation Net Operating Income 29.000 17.400 11.600 2.312 2.890 6.398 2 29.000 17.400 11.600 2.312 2.890 6.398 9 10 29.000 29.000 17.400 17.400 11.600 11.600 2.312 2.312 2.890 2.890 6.398 6.398 D a. Given the available information, what are the free cash flows in years 0 through 10 that should be used to evaluate the proposed project? The free cash flow for year 0 is $ million. (Round to three decimal places.) The free cash flow for years 1 to 9 is $. million. (Round to three decimal places.)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
Please do not give solution in image format thanku
Transcribed Image Text:PLEASE SOLVE (a) and also the Free Cash Flow in year 10
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 $1.3 million for this report, and I am not sure their analysis makes sense. Before we spend
the $28.9 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
Sales Revenue
-Cost of Goods Sold
=Gross Profit
- General, Sales and Administrative Expenses
- Depreciation
= Net Operating Income
1
2
29.000 29.000
17.400 17.400
11.600
11.600
2.312
2.312
2.890
6.398
2.890
6.398
9
29.000
10
29.000
17.400 17.400
11.600
2.312
2.890
6.398
11.600
2.312
2.890
6.398
D₁
a. Given the available information, what are the free cash flows in years 0 through 10 that should be used to evaluate the proposed project?
The free cash flow for year 0 is $
million. (Round to three decimal places.)
The free cash flow for years 1 to 9 is $ million. (Round to three decimal places.)
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
Recommended textbooks for you
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education