Moving to the next question prevents changes to this answer Question 1 of 2 Question 1 5 points Q2: XYZ 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) Item Year 1 Year 2 Revenues 200 160 COGS and operating expenses 50 80 Depreciation 30 40 Increase in NWC 6 3 Capital expenditures 30 40 Marginal corporate tax rate 40% 35% a. Calculate the incremental earnings for this project for years 1 and 2 b. Calculate the free cash flows for this project for the first two years. C. If the initial investment of the project is 10 thousand dollars and the cost of capital for this project is 15%, what is your estimate of the value of the new project? d. IfXYZ has a debt of 5 thousand dollars and its number of shares outstanding is 2 thousand shares, what is the price of its stock? For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac). B I VS Paragraph Arial 14px . Q 6 DE x *, & TTTT 1 * 2 * A EE V V G . ES +] !! E E a 0) 2 02: XYZ 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) Hom Your 1 Year 2 Revenues 200 160 COGS and Operating expenses 50 80 Depreciation 30 40 Increase in NWC 6 9 Capital expenditures 30 40 Marginal corporate tax rate 40% a Calculate the incremental earnings for this project for years 1 and 2 b. Calculate the free cash flows for this project for the first two years. c. If the initial investment of the project is 10 thousand dollars and the cost of capital for this project is 15%, what is your estimate of the value of the new project? d. If XYZ has a debt of 5 thousand dollars and its number of shares outstanding is 2 thousand shares, what is the price of its stock