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):

b. What are the free cash flows for this project for years 1 and 2?

Free Cash Flow (millions)	Year 1	Year 2
Unlevered Net Income
Depreciation
Capital Expenditure
Change in NWC
Free Cash Flow

BC Year 1 Year 2 Revenues 122.5 154.6 COGS and Operating Expenses (other than depreciation) 42.4 52.5 Depreciation 20.8 36.3 Increase in Net Working Capital Capital Expenditures 34.5 44.9 Marginal Corporate Tax Rate 35% 35% 7.6