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$)$: LOADING....

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$2?$

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Part $1$

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

$

$

EBIT

$

$

Income tax at $21\%$

$

$

Unlevered Net Income

$

$

Year $1$

Year $2$

Revenues

$123\mathrm{.}3$

$159\mathrm{.}5$

Operating Expenses$($other than$$ depreciation$)$

$42\mathrm{.}8$

$69\mathrm{.}9$

Depreciation

$24\mathrm{.}9$

$25\mathrm{.}2$

Increase in Net Working Capital

$3\mathrm{.}8$

$8\mathrm{.}5$

Capital Expenditures

$34\mathrm{.}5$

$43\mathrm{.}3$

Marginal Corporate Tax Rate

$21\%$