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Finance

Year 1

Year 2

Revenues

120.8

150.6

COGS and Operating Expenses (other than depreciation)

46.1

54.5

Depreciation

24.9

32.9

Increase in Net Working Capital

2.8

8.2

Capital Expenditures

29.2

38.4

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?

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