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Assume that in the original Ityesi example in Table, all sales actually occur in the United States and are projected to be $59.5 million per year for four years. Keeping other costs the same, calculate the NPV of the investment opportunity. Assume the WACC is 7.1%. The forward exchange rates are given below.

Ascumc that in tha onginal Itysi cxample in Tablcalalas actually cccur in the Unted Statcs and arc projccted to bc $59 5milion per ycar for four ycars. Kecping other cos the same, taculate the NPV of the invacment opportunity. Acsume the WAOC is7.1SThe forward cxtharg rates ar given below Ycar Forward Exchhage Rale (S/C) 1.45 1.5198 1.3631 Calaate the casn 1owa below: (Round to 'hree decimal places Forward esehange ra8mst berorded to tour decimal places ) Yaar Free cash fow (milons of pound:) Forward excherge ratse Free cash fow (milus odollas Dala Table TABLE 31.1 SPREADSHEET Expected Foreign Free Cash Flows from Ityesi's U.K. Project Cach low (mlons of dcllars) Year 0 Incremental Earnings Forecast I millions) 1 Sales 2 Cost Goods Sola 3 Gross Profit 37500 32500 37500 37500 5.62b) 115.62 (15.625, 16.625; 21. 21.875 21.875 21.875 4.167 5.625 5.625 5.625 5.625 3.750 13.750 3.5O 13.750 4.167 12.0 12.500 12.500 12.bU0 1667 5.000) 5.000 5CCOI 5 000 (2600) 500 500 7500 2.500 5 Depreciation 6 EBIT Income tax at 40% 8 Unlevered Net Income Free Cash Flow 9 Plus: Depreciation 10 Less: Capital Expenditureds 11 Less: Increases in NWC 12 Pound Free Cash Flow 3.750 3.750 3.750 3.750 15.000 17.500) 11.250 11.250 11.250 11.250

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