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): (Click on the following icon in order to copy its contents into a spreadsheet.) Revenues COGS and Operating expenses other than depreciation Depreciation Increase in net working capital Capital expenditures Marginal corporate tax rate Year 1 103.7 43.3 26.1 3.9 30.4 a. What are the incremental earnings 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 earnings for this project for years 1 and 2? The incremental earnings for year 1 is $ 25% million. (Round to one decimal place.) million. (Round to one decimal place.) The incremental earnings for year 2 is $ 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.) million. (Round to one decimal place.) The free cash flow for year 2 is $ Year 2 156.5 40.1 33.2 7.4 40.8 25%
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): (Click on the following icon in order to copy its contents into a spreadsheet.) Revenues COGS and Operating expenses other than depreciation Depreciation Increase in net working capital Capital expenditures Marginal corporate tax rate Year 1 103.7 43.3 26.1 3.9 30.4 a. What are the incremental earnings 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 earnings for this project for years 1 and 2? The incremental earnings for year 1 is $ 25% million. (Round to one decimal place.) million. (Round to one decimal place.) The incremental earnings for year 2 is $ 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.) million. (Round to one decimal place.) The free cash flow for year 2 is $ Year 2 156.5 40.1 33.2 7.4 40.8 25%
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter6: Accounting For Financial Management
Section: Chapter Questions
Problem 11P: The Berndt Corporation expects to have sales of 12 million. Costs other than depreciation are...
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