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Problem $9-14$

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$)$:

$\backslash$table$[[,$Year $1,$Year $2],[$Revenues$,125,160],[$Operating expenses $($other than depreciation$),40,60],[$Depreciation$,25,36],[$Increase in net working capital,$2,8],[$Capital Expenditures,$30,40],[$Marginal Corporate tax rate:,$21\%,21\%$