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):

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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?

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): E 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 $ $ Data Table EBIT $ $ 1 Income tax at 21% $ $ (Click on the following icon in order to copy its contents into a spreadsheet.) Unlevered Net Income $ $ b. What are the free cash flows for this project for years 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 Revenues Operating Expenses (other than depreciation) Depreciation Increase in Net Working Capital Capital Expenditures Marginal Corporate Tax Rate Year 1 123.5 46.1 23.5 2.6 28.2 21 % Year 2 159.7 59.2 44.1 8.4 38.5 21 % Unlevered Net Income $ $ $ $ Depreciation Capital Expenditure Change in NWC $ $ Print Done $ $ Free Cash Flow CA $