Alpha 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	125	160
Cost of goods sold and operation expenses other than depreciation	40	60
Capital cost allowance	25	36
Increase in working capital	5	8
Capital expenditures	30	40
Marginal corporate tax rate	35%	35%

a. What are the incremental earnings for this project for year 1 and year 2? (3 points)

b. What are the free cash flows for this project for the first two years?