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
Revenues	129.7129.7	159.9159.9
COGS and Operating expenses (other than depreciation)	42.242.2	64.164.1
Depreciation	22.422.4	37.337.3
Increase in working capital	3.83.8	8.28.2
Capital expenditures	29.229.2	41.441.4
Marginal corporate tax rate	45 %45%	45 %45%

a. What are the incremental earnings for this project for years 1 and 2?

b. What are the free cash flows for this project for the first two years?

a. What are the incremental earnings for this project for years 1 and 2?

The incremental earnings for year 1 is

$nothing

million. (Round to one decimal place.)The incremental earnings for year 2 is

$nothing

million. (Round to one decimal place.)

b. What are the free cash flows for this project for the first two years?