Transcribed image text: Etobicoke 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 123.1 154.2 Operating Expenses (other than depreciation) 33.5 60.3 CCA 25.9 33.3 Increase in Net Working Capital 2.7 8.4 Capital Expenditures 31.7 43.6 Marginal Corporate Tax Rate 35% 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 the first two years? a. Calculate the incremental earnings for Year 1 of this project below: (Round to one decimal place.) Incremental Earnings Forecast (millions) Year 1 Sales Operating Expenses CCA EBIT Income tax at 35% Unlevered Net Income Enter any number in the edit fields and then click Check Answer.

 

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 thjs project foe tbe first 2 years?