Shepard Industries is evaluating a proposal to expand its current distribution facilities. Management has projected the project will produce the following cash flows for the first two years (in millions).
| Year | 1 | 2 |
| Revenues | 1 comma 2001,200 | 1 comma 5001,500 |
| Operating expense | nbsp 450 450 | nbsp 550 550 |
| Depreciation | nbsp 220 220 | nbsp 290 290 |
| Increase in working capital | nbsp 60 60 | nbsp 80 80 |
| Capital expenditures | nbsp 250 250 | nbsp 300 300 |
| Marginal corporate tax rate | 30% | 30% |
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