Business, 10.04.2020 23:49, jv910699

Elmdale Enterprises is deciding whether to expand its production facilities. Although long-term cash flows are difficult toestimate, management has projected the following cash flows for the first two years (in millions of dollars):

Year 1

Year 2

Revenues

118.1

151.1

COGS and Operating expenses (other than depreciation)

45.7

47.6

Depreciation

22.2

38.3

Increase in working capital

5.5

8.6

Capital expenditures

25.8

41.8

Marginal corporate tax rate

41%

41%

a. What are the incremental earnings for this project for years 1 and 2?

The incremental earnings for year 1 is $million. (Round to one decimal place.)

b) The incremental earnings for year 2 is $million. (Round to one decimal place.)

c. What are the free cash flows for this project for the first two years?

Answers: 1

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Elmdale Enterprises is deciding whether to expand its production facilities. Although long-term cash...