402 688 Etobicoke Enterprises is deciding whether to expand its production facilities. Although long-term cash flows are difficult to estimate, management has projected the following cash flows for the first two years (in millions of dollars) Year 1 Year 2 Revenues 122.5 1561 Operating Expenses (other than depreciation) CCA 21.9 33,8 Increase in Net Working Capital 3.3 7.8 Capital Expenditures 26.7 39.6 Marginal Corporate Tax Rate 35% 35% a. What are the incremental eamings for this project for years 1 and 22 (Note: Assume any incremental cost of goods sold is included as part of operating expenses.) b. What are the free cash flows for this project for the first two years? a. Calculate the incremental earnings for Year 1 of this project below: (Round to one decimal place.) Incremental Earnings Forecast (millions) Year 1 Sales Operating Expenses CCA EBIT $ Income tax at 35% $ Unlevered Net Income