Year 1 Year 2

Revenues 128.9 151.6

COGS and Operating Expenses (other than depreciation) 49.6 52.7

Depreciation 24.9 43.5

Increase in Net Working Capital 3.4 8.1

Capital Expenditures 27.3 43.2

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 years 1 and 2?

Incremental Earnings Forecast (millions)		Year 1
Sales	$
Operating Expenses	$
Depreciation	$
EBIT	$
Income tax at 35%	$
Unlevered Net Income	$