Homework #2 fm 340 Question 1: (7 points) WSU 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 Year 1 Year 2 Revenues 125 160 COGS and Operating expenses (other than Depreciation 40 60 Depreciation 25 36 Increase in working capital 5 8 Capital Expenditures 30 40 Corporate tax rate 20% 20% 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