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):

	Year 1	Year 2
Revenues	118.1	154.8
COGS and Operating expenses (other than depreciation)	41.1	41.5
Depreciation	28.7	37.5
Increase in working capital	3.9	8.7
Capital expenditures	27.1	40.4
Corporate tax rate	20%	20%

a. What are the incremental earnings for this project for years 1 and 2?

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

a. What are the incremental earnings for this project for years 1 and 2?

The incremental earnings for year 1 is

$enter your response here

million. (Round to one decimal place.)The incremental earnings for year 2 is

$enter your response here

million. (Round to one decimal place.)

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

The free cash flow for year 1 is

$enter your response here

million. (Round to one decimal place.)The free cash flow for year 2 is

$enter your response here

million. (Round to one decimal place.)