\

Elmdale 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): a. What are the incremental earnings for this project for years 1 and 2? (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 years 1 and 2? a. What are the incremental earnings for this project for years 1 and 2? (Note: Assume any incremental cost of goods sold is included as part of operating expenses.) Calculate the incremental earnings of this project below: (Round to one decimal place.) Incremental Earnings Forecast (millions) Year 1 Year 2 Sales $ $ $ $ Operating Expenses Depreciation $ $ EBIT $ $ Income tax at 21% $ $ Unlevered Net Income $ $ b. What are the free cash flows for this project for yea 1 and 2? Calculate the free cash flows of this project below: (Round to one decimal place.) Free Cash Flow (millions) Year 1 Year 2 Unlevered Net Income $ $ Depreciation $ $ Capital Expenditure $ $ Change in NWC $ $ Free Cash Flow $ $ x Data table (Click on the following icon in order to copy its contents into a spreadsheet.) Year Revenues Operating Expenses (other than depreciation) Depreciation Increase in Net Working Capital Capital Expenditures Marginal Corporate Tax Rate Year 1 127.6 31.7 22.6 2.3 34.5 21 % 163.5 65.5 40.5 8.9 38.1 21 %