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

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

104.1

158.9

COGS and Operating expenses​ (other than​ depreciation)

39.9

57.6

Depreciation

28.3

31.3

Increase in working capital

4.3

8.2

Capital expenditures

34.2

38.6

Corporate tax rate

20%

20%

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

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

*round to one decimal place*

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