pls help with part a and b ### Financial Overview: Two-Year ComparisonThis table presents a financial summary comparing two consecutive years (Year 1 and Year 2) for a hypothetical company. The figures are expressed in millions of dollars unless otherwise indicated.- **Revenues:** - Year 1: $123.1 million - Year 2: $160.2 million- **Operating Expenses (other than depreciation):** - Year 1: $39.4 million - Year 2: $56.2 million- **Depreciation:** - Year 1: $20.3 million - Year 2: $26.6 million- **Increase in Net Working Capital:** - Year 1: $3.2 million - Year 2: $8.6 million- **Capital Expenditures:** - Year 1: $34.2 million - Year 2: $41.5 million- **Marginal Corporate Tax Rate:** - Year 1: 21% - Year 2: 21%This data is useful for analyzing the company’s financial health, growth patterns, and resource allocation over the specified period. 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?-----**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.)*Calculate the incremental earnings of this project below: *(Round to one decimal place.)*| **Incremental Earnings Forecast (millions)** | **Year 1** | **Year 2** ||:--------------------------------------------:|:----------:|:----------:|| Sales | $ | $ || Operating Expenses | $ | $ || Depreciation | $ | $ || **EBIT** | $ | $ || Income tax at 21% | $ | $ || **Unlevered Net Income** | $ | $ | The table is designed to calculate the incremental earnings forecast, with key metrics like Sales, Operating Expenses, Depreciation, EBIT (Earnings Before Interest and Taxes), Income tax at 21%, and Unlevered Net Income for Years 1 and 2. Calculations should be rounded to one decimal place, with inputs for each field to determine the earnings for each year.

Solution:- calculation of the incremental earnings for this project for years 1 and 2 as follows under:-Incremental earnings forecast (Million) Year 1 Year2 Sales (a) 123.1 160.2 Operating expenses(b) 39.4 56.2 Depreciation (c) 20.3 26.6 EBIT (d)= a- b + c 63.4 77.4 Income tax @21% (e) 13.31 16.25 Unlevered Net Income (f) =d -e 50.09 61.15b)Calculation of the free cash flows for this project for years 1 and 2 as follows under:- Free cash flows Year 1 Year2 Unlevered Net Income (a) 50.09 61.15 Depreciation (b) 20.3 26.6 Capital expenditure (c) 34.2 41.5 Change in net working capital (d) 3.2 8.6 Free cashflows (e) = a +b - c - d 32.99 37.65 I hope helpful to you.. If you are satisfied.. Support me.. Thank you..

Business

Accounting

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?

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?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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