Do not type in numerical data into a cell or function. Instead, make a reference to the cell in which the data is found. Please show formulas on how to get the solution. Looking for help in the Yellow boxes.

				Year 1	Year 2
	Revenues			$125	$160
	Costs of goods sold and operating expenses other than depreciation			$40	$60
	Depreciation			$25	$36
	Increase in net working capital			$5	$8
	Capital expenditures			$30	$40
	Marginal corporate tax rate			35%	35%
a.	What are the incremental earnings for this project for years 1 and 2?
	Incremental Earnings Forecast (million)
	Year			Year 1	Year 2
	Sales
	Less: Costs of goods sold and operating expenses other than depreciation
	Less: Depreciation
	EBIT
	Less: Income tax at 35%
	Unlevered Net Income
b.	What are the free cash flows for this project for the first two years?
	Free Cash Flows (million)
	Year			Year 1	Year 2
	Plus: Depreciation
	Less: Capital Expenditures
	Less: Increases in NWC
	Free Cash Flow