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(Solved): Al of the estimates in the report seem correct You nole that the coneultants used straight-Ine cepr ...




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Al of the estimates in the report seem correct You nole that the coneultants used straight-Ine cepreciation for the new equipment that will be purchased todyy (year 0), which is what the acoounting department recommended. The repert condudes that becase the project will inchase earsings by milion per year tor 10 yean, the project ia worth mililon. You inink back to your haicyon days in finanee class and realize there is more work to be dsne? Frit, you nole that the consultants have not factored in the fact that the project wit require million in workng capita uptront (year 0), which will be fully recovered in year 10 . Next, you see they aceepted. Frailly, you know that accounting eamings ere not the fight thing to focus on! a. Gven the evalabie intornation, what are the free cash fows in yearn o threugh to that should be used to twaluate the proposed projech b. If the cost of capital for this project is , what is your estimate of the value of the new project? a. Given the avalabie information, what are the free cash fows in years 0 through 10 that thous be used to evaluate the propoted profech The tree cash foe for yea o is 5 millien. (Reand to three decinal places asd enter a decrease as a negatere number). The free cast flew for yean 1 to 9 is 5 malion. (Reund to thee decimal paces and enter a decrease as a negative numbet.)


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