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...

please answer a and b

Extracted text: 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): E. 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? ..... 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.) Calculate the incremental earnings of this project below: (Round to one decimal place.) Incremental Earnings Forecast (millions) Year 1 Year 2 Sales $ Operating Expenses Depreciation ЕBIT 2$ $ Income tax at 21% $ Unlevered Net Income $ %24 %24 %24


Extracted text: Year 1 Year 2 Revenues 123.6 166.7 68.8 Operating Expenses (other than depreciation) Depreciation Increase in Net Working Capital 41.6 29.8 29.7 2.3 7.9 Capital Expenditures 32.9 35.2 Marginal Corporate Tax Rate 21 % 21 %