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Year 1 Year 2 Revenues 123.3 166.9 Operating Expenses (other than depreciation) 44.6 67.2 Depreciation 28.9 43.4 Increase in Net Working Capital 2.9 8.8 Capital

Year 1

Year 2

Revenues

123.3

166.9

Operating Expenses (other than depreciation)

44.6

67.2

Depreciation

28.9

43.4

Increase in Net Working Capital

2.9

8.8

Capital Expenditures

26.4

43.4

Marginal Corporate Tax Rate

21

%

21

%

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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 years 1 and 2

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