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):
COGS and Operating expenses (other than depreciation)
Increase in working capital
Corporate tax rate
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?