To determine the incremental annual free cash flow (FCF) for the project, we need to follow these steps:

1. Calculate the Earnings Before Interest and Taxes (EBIT): $\text{EBIT} = \text{Revenue} - \text{Operating Expenses} - \text{Depreciation and Amortisation}$

2. Calculate the Net Income: $\text{Net Income} = \text{EBIT} \times (1 - \text{Tax Rate})$

3. Calculate the Incremental Annual Free Cash Flow (FCF): $\text{FCF} = \text{Net Income} + \text{Depreciation and Amortisation} - \text{Capital Expenditure}$

Now, let’s plug in the numbers:

1. Revenue: $310,000
2. Operating Expenses: $140,000
3. Depreciation and Amortisation: $50,000
4. Capital Expenditure: $10,000
5. Tax Rate: 35%

Step-by-Step Calculation:

1. EBIT: $\text{EBIT} = 310,000 - 140,000 - 50,000 = 120,000$

2. Net Income: $\text{Net Income} = 120,000 \times (1 - 0.35) = 120,000 \times 0.65 = 78,000$

3. Free Cash Flow: $\text{FCF} = 78,000 + 50,000 - 10,000 = 118,000$

So, the incremental annual free cash flow for the project is $118,000.

Would you like any additional details or explanations? Here are some related questions:

1. How would changes in the tax rate affect the FCF?
2. What is the impact of increasing capital expenditure on the project’s cash flow?
3. How would variations in operating expenses influence the overall FCF?
4. Can FCF be negative, and what does that indicate about a project?
5. What is the significance of including depreciation and amortization in cash flow calculations?

Tip: Understanding Free Cash Flow is crucial for evaluating the profitability and financial health of a project, as it shows the cash available to investors after accounting for capital expenditures.