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i. You are upgrading to better production equipment for yourfirm's only product. The new equipment will allow you to make more of your product in the same amount of time.Thus, you forecast that total sales will increase next year by 21 % over the current amount of 97,000 units. If your sales price is $ 19 perunit, what are the incremental revenues next year from theupgrade? (round to the nearest dollar)

ii. You have forecast pro forma earnings of $1,167,000. This includes the effect of $200,000 in depreciation. You also forecast a decrease in working capital of $94,000 that year. What is your forecast of free cash flows for thatyear? (round to the nearest dollar)

iii. Home BuilderSupply, a retailer in the home improvementindustry, currently operates seven retail outlets in Georgia and South Carolina. Management is contemplating building an eighth retail store across town from its most successful retail outlet. The company already owns the land for thisstore, which currently has an abandoned warehouse located on it. Lastmonth, the marketing department spent $15,000 on market research to determine the extent of customer demand for the new store. Now Home Builder Supply must decide whether to build and open the new store.

Which of the following should be included as part of the incremental earnings for the proposed new retailstore?

a. The original purchase price of the land where the store will be located.

b. The cost of demolishing the abandoned warehouse and clearing the lot.

c. The loss of sales in the existing retailoutlet, if customers who previously drove across town to shop at the existing outlet become customers of the new store instead.

d. The $15,000 in market research spent to evaluate customer demand.

e. Construction costs for the new store.

f. The value of the land if sold.

g. Interest expense on the debt borrowed to pay the construction costs.