q12

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 dollars): Year 1 Year 2 Revenues COGS and Operating expenses (other than depreciation) Depreciation Increase in working capital Capital expenditures Marginal corporate tax rate 107.3 45.8 24.5 5.3 33.2 40% 160.5 35.5 35.4 7.2 39.8 40% 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 ismillion. (Round to one decimal place.) The incremental earnings for year 2 is millio. (Round to one decimal place.) b. What are the free cash flows for this project for the first two years? The free cash flow for year 1 is $J million. (Round to one decimal place.) The free cash flow for year 2 is s million. (Round to one decimal place.)