Question 4 (Total 12 marks) Elinior Enterprise is deciding whether to expand its production facilities which allow them to generate $ 450,000 per year for five years. Those incremental revenues will be associated with other cash flows as shown in Table 2 below. Year 1 2 3 5 Revenues 450,000 450,000 450,000 450,000 450,000 Operating 40,000 55,000 60,000 70,000 60,000 expenses Depreciation 25,000 36,000 40,000 45,000 50,000 Increase in net 2,000 4,000 6,000 8,000 12,000 working capital Capital 30,000 40,000 20,000 50,000 60,000 expenditures Marginal tax rate 35% 35% 35% 35% 35% Required: a) Compute the incremental earning. (5 marks) b) Compute the free cash flow. (5 marks) c) Discuss why depreciation is added back to the incremental earnings