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): Revenues COGS and Operating Expenses (other than depreciation) Depreciation Increase Net Working Capital Capital Expenditures Marginal Corporate Tax Rate Year 1 120.3 40.5 29.7 3.7 26.4 35% Year 2 155.9 57.8 39.8 7.6 40.4 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.) Year 1 $ Incremental Earnings Forecast (millions) Sales Operating Expenses Depreciation EBIT $ $ $ Income tax at 35% $ Unlevered Net Income $