You are a manager at Northern Fibre, which is considering expanding its operations in synthetic fibre manufacturing Your boss comes into your office dropna consultant's report on your desk, and complains, "We owe these consultants $1.9 million for this report, and I am not sure their analysis makes sense. Before spend the $21 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) 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 profit 12.000 12.000 12 000 12.000 - General, sales, and administrative expenses 1.680 1.680 1.680 1.680 -Depreciation 2.100 2.100 2 100 2 100 = Net operating income 8.2200 8.2200 8.2200 8.2200 -Income tax 2.877 2.877 2877 2.877 21 ns b. If the cost of capital for this project is 12%, what is your estimate of the value of the new project? Value of project=smillion (Round to three decimal places) ng - Income tax 2.877 2.877 2877 2.877 Net Income 5.343 5.343 5.343 5.343 All of the estimates in the report seem correct. You note that the consultants used straight-line depreciation for the new equipment that will be purchased today (year 0), which is what the accounting department recommended for financial reporting purposes. CRA allows a CCA rate 1,45% on the equipment for purposes. The report concludes that because the project will increase earnings by $5,343 million per year for ten years, the project in wort: 553 43 millions You think back to your glory days in finance class and realize there is more work to be donel First you note that the consultants have not factored in the fact that the project will require $12 million in working capital up front (year), which will be fully recovered in year 10. Next you see they have attributed 51 68 million of selling, general and administrative expenses to the project, but you know that 5004 million of this amount is overhead that will be incurred even if the project is not accepted. Finally, you know that accounting earnings are not thing to focus ont b. If the cost of capital for this project is 12%, what is your estimate of the value of the new project? b. If the cost of capital for this project is 12%, what is your esti of the value of the new project? Value of project million (Round to three decimal places.)