Elmdale Enterprises is deciding whether to expand its production facilities. Although long-term cash flows are difficult...
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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): 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? 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.) Calculate the incremental earnings of this project below: (Round to one decimal place.) le Incremental Earnings Forecast (millions) Year 1 Year 2 Data table Sales $ S Operating Expenses the following icon in order to copy its contents into a spreadsheet.) Depreciation ar 1 2 EBIT $ $ venues 128.7 152.6 Income Tax at 28% Unlevered Net Income $ $ erating Expenses (other than depreciation) preciation 37.3 64.6 27.3 41.3 rease in Net Working Capital 2.1 8.4 bital Expenditures B 27.2 36.5 rginal Corporate Tax Rate 28% 28% 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): 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? 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.) Calculate the incremental earnings of this project below: (Round to one decimal place.) le Incremental Earnings Forecast (millions) Year 1 Year 2 Data table Sales $ S Operating Expenses the following icon in order to copy its contents into a spreadsheet.) Depreciation ar 1 2 EBIT $ $ venues 128.7 152.6 Income Tax at 28% Unlevered Net Income $ $ erating Expenses (other than depreciation) preciation 37.3 64.6 27.3 41.3 rease in Net Working Capital 2.1 8.4 bital Expenditures B 27.2 36.5 rginal Corporate Tax Rate 28% 28%
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