What are the incremental earnings for the project

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Reference no: EM131969691

Question: 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):

	Year 1	Year 2
Revenues	128.6	157.4
COGS and Operating Expenses (other than depreciation)	30.4	54.9
Depreciation	21.1	44.4
Increase in Net Working Capital	3.4	7.2
Capital Expenditures	26.5	35.4
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?

Reference no: EM131969691

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