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 1 128.5 37.3 21.4 29 283 35% Year 2 169.1 64.4 30.5 Revenues COGS and Operating Expenses (other than depreciation) Depreciation Increase in Net Working Capital Capital Expenditures Marginal Corporate Tax Rate 7.3 39.9 35% 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? 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 35% 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.) Year 1 Year 2 Free Cash Flow (millions) Unlevered Net Income Depreciation Capital Expenditure Change in NWC Free Cash Flow