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
Revenue	120.3	154.5
COGS & Other Expenses (other than depreciation)	42.4	65.6
Depreciation	22.5	28.9
Increase in Net Working Capital	2.8	7.4
Capital Expenditures	34.3	41.9
Marginal Corporate Tax Rate	35 %	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.)

calculate the incremental earnings below:

Incremental Earnings Forecast (millions)	Y E A R 1
Sales	$_____________________
Operating Exspenses	$_____________________
Depreciation	$_____________________
EBIT	$_____________________
Income Tax at 35 %	$_____________________
Unlevered Net Income	$_____________________

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