Year 2 $ 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 of dollars) 2. What are the incremental earings for this project for years 1 and 27 (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? a. What are the incremental earings for this project for years 1 and 27 (Note: Assume any incremental cost of goods sold is included as part of operating expenses.) Calculate the incremental earings of this project below. (Round to one decimal place.) Incremental Earnings Forecast (millions) Year 1 Sales $ Operating Expenses $ Depreciation $ $ EBIT $ Income tax at 21% $ $ Unlevered Net Income $ $ b. What are the free cash flows for this project for years 1 and 22 Calculate the free cash flows of this project below (Round to one decimal place) Free Cash Flow (millions) Year 1 Year 2 Unlevered Net Income 5 Depreciation $ 5 Capital Expenditure $ $ Change in NWC $ $ Free Cash Flow Revenues Operating Expenses (other than depreciation) Depreciation Increase in Net Working Capital Capital Expenditures Marginal Corporate Tax Rate Year 1 121.1 37.9 22.2 3.9 25.9 21 % Year 2 167.8 50.8 40.8 8.4 38.1 21%