Etobicoke Enterprises is deciding whether to expand its production facilities. Although long-term cash flows are difficu

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Etobicoke Enterprises Is Deciding Whether To Expand Its Production Facilities Although Long Term Cash Flows Are Difficu 1 (19.68 KiB) Viewed 25 times

Etobicoke 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): Revenues Operating Expenses (other than depreciation) CCA Increase in Net Working Capital Capital Expenditures Marginal Corporate Tax Rate Year 124.5 35.1 24.6 2.3 32.4 35% Year 2 150.2 53.5 36.7 8.3 35.4 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 the first two years?