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of 40%. What are your pro forma earnings? What is your pro forma free cash flow? 10. You are evaluating a new product. In year 3 of your analysis, you are projecting pro forma sales of $5 million and cost of goods sold of $3 million. You will be depre- ciating a $1 million machine for 5 years using straight-line depreciation. Your tax rate is 35%. Finally, you expect working capital to increase from $200,000 in year 2 to $300,000 in year 3. What are your pro forma earnings for year 3? What are your pro forma free cash flows for year 3? 11. You are forecasting incremental free cash flows for Daily Enterprises. Based on the information in Problems 1 and 2, what are the incremental free cash flows associated with the new machine