Question

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 Elmdale Enterprises dollars) Year 1 Year 2 160.7 64.7 Revenues 111.8 COGS and Operating expenses (other than depreciation) Depreciation Increase in working capital Capital expenditures Corporate tax rate 43.7 28.3 33.3 5.1 8.5 34.1 44.2 20 % 20% a. What are the incremental eamings for this project for years 1 and 2? b. What are the free cash flows for this project for the first two years? a. What are the incremental eamings for this project for years 1 and 2? The incremental earnings for year 1 is $million. (Round to one decimal place.) The incremental earnings for year 2 is $million. (Round to one decimal place.) b. What are the free cash flows for this project for the first two years? The free cash flow for year 1 is $million. (Round to one decimal place.) The free cash flow for year 2 is Smillion. (Round to one decimal place.) Enter your answer in each of the answer boxes.

Answer 1

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ZE 44 46 PE EPS, STOCK DIVIDEND - Microsoft Excel (Product Activation Failed) File Home Insert Page Layout Formulas Data Review View Add-Ins - 2x % Cut Σ AutoSum : A Calibri 11AA = = = Dr Wrap Text General Ea Copy Fill Paste B I U B- E A = 5 st Fat Merge Merge & Center - Center $ $ -% % , .0 .00 . Format Painter Conditional Format Cell Insert Delete Format Sort & Find & Formatting as Table Styles 2 Clear Filter Select Clipboard Font Alignment Number Styles Cells Editing ZG40 - for ZCZD T ZF ZG ZH Z Z Z ZIL 40 41 42 YEAR 1 YEAR 2 43 INCREMENTAL EARNINGS FORECAST SALES 111.8 160.7 45 LESS COST OF GOODS SOLD & OPERATING EXPENSES 43.7 64.7 47 LESS DEPRECIATION 28.3 33.3 48 EBIT 39.8 62.7 49 LESS TAXES 8.0 12.5 50 UNLEVERED NET INCOME 31.8 50.2 51 CALCULATION OF FREE CASH FLOW 53 UNLEVERED NET INCOME 31.8 50.2 54 ADD DEPRECIATION 28.3 33.3 55 LESS CAPITAL EXPENDITURE 34.1 44.2 56 LESS INCREASE IN NWC 5.1 8.5 FREE CASH FLOW 20.9 30.8 58 59 60 H HIGH LOW TARGET PRICE STOCK DIV NAV HEDGE FUND ME EV PE EPS DIV ABNORMAL deberk MARGIN MONEY marginal tax PB ROPI APV ROSS price quote EVA MVAI Rea ferences BOJ 120% - _+ ELEB * * OENG 01-11-2019 52 57