Word QUESTION 17 XYZ Enterprises is deciding whether to expand its production facilities. Although long-term cash flows are difficult to estimate, management has projected the fol flows for the first two years (in millions of dollars): Items Revenues Year1 125 Costs of Good sold and operating expenses and 40 other than depreciation Depreciation 25 Increase in net working capital 5 Capital expenditures 30 Marginal corporate tax rate 35% Year2 160 60 36 8 40 35% a. What are the incremental earnings for this project for years 1 and 2? (2 marks) C. If the initial investment of the project is 10 thousand dollars and the cost of capital for this project is 15%, what is your estimate of the value of the the DFCF approach? (1.5 marks) d. If XYZ has a debt of 5 thousand dollars and its number of shares outstanding is 2 thousand shares, what is the price of its stock? (1.5 marks) "I Arial 3 (12pt) TEE ABC