anagement has projected the following cash flows for the first two years (in millions of dollars): What are the incremental earnings for this project for years 1 and 2? (Note: Assume any incremental cost of goods sold is included as part operating expenses.) What are the free cash flows for this project for years 1 and 2? Click on the following icon order to copy its contents into a spreadsheet.) Revenues Operating Expenses (other than depreciation) Depreciation Year 1 126.8 42.5 25.9 Year 2 165.1 62.5 26.5
anagement has projected the following cash flows for the first two years (in millions of dollars): What are the incremental earnings for this project for years 1 and 2? (Note: Assume any incremental cost of goods sold is included as part operating expenses.) What are the free cash flows for this project for years 1 and 2? Click on the following icon order to copy its contents into a spreadsheet.) Revenues Operating Expenses (other than depreciation) Depreciation Year 1 126.8 42.5 25.9 Year 2 165.1 62.5 26.5
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 1PA: Your company is planning to purchase a new log splitter for is lawn and garden business. The new...
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![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):
a. What are the incremental earnings for this project for years 1 and 2? (Note: Assume any incremental cost of goods sold is included as part
of operating expenses.)
b. What are the free cash flows for this project for years 1 and 2?
(Click on the following icon
in order to copy its contents into a spreadsheet.)
Revenues
Operating Expenses (other than depreciation)
Depreciation
Increase in Net Working Capital
Capital Expenditures
Marginal Corporate Tax Rate
Year 1
126.8
42.5
25.9
3.3
26.5
21
%
Year 2
165.1
62.5
26.5
7.4
35.4
21
%](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F7111bd9f-157b-49ea-822e-a545513e6e93%2F97d8d97a-5ce7-4775-ad97-f2c2cc6eb57a%2Fz641ksw_processed.jpeg&w=3840&q=75)
Transcribed Image Text: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):
a. What are the incremental earnings for this project for years 1 and 2? (Note: Assume any incremental cost of goods sold is included as part
of operating expenses.)
b. What are the free cash flows for this project for years 1 and 2?
(Click on the following icon
in order to copy its contents into a spreadsheet.)
Revenues
Operating Expenses (other than depreciation)
Depreciation
Increase in Net Working Capital
Capital Expenditures
Marginal Corporate Tax Rate
Year 1
126.8
42.5
25.9
3.3
26.5
21
%
Year 2
165.1
62.5
26.5
7.4
35.4
21
%
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