Allendale Enterprises is deciding whether to expand its production facilities. The management team has projected the following

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Question:

Allendale Enterprises is deciding whether to expand its production facilities. The management team has projected the following cash flows for the first three years (in millions of dollars):

Revenue
yr1:130
yr2:140
yr3:150
Costs
yr1:60
yr2:65
yr3:70
Depreciation
yr1:25
yr2:25
yr3:25
Net Working Capital
yr1:20
yr2:22
yr3:23
Assume that Allendale has zero net working capital now and the tax rate is 30%. What is the incremental free cash flow for year 3?