2. A firm is determining whether to invest in a new project designed to make state of the art widgets. The firm has created a tentative sales forecast and investment schedule detailed below. Based on that information complete the income and incremental cash flows tables. (20 points) Year 0 Sales (units) Selling Price (per unit) Costs (per unit) Year 1 10,000 20 15 Year 2 15,000 30 20 Year 3 20.000 40 25 Year 0 Year 1 Year 2 -300 2 Investments: (in 000s) Widget Machine Accumulated Depreciation 3 Adjusted Basis of Machine After Depreciation 4 Warehouse Opportunity Cost 5 Net Working Capital 50 250 150 150 Year 3 50 300 0 100 0 -100 30 30 37.5 Income: Year 0 Year 1 Year 2 Year 3 Sales Revenue Operating Costs Depreciation Income Before Taxes Tax (34%) Net Income Incremental Cash Flows: Sales Revenue Operating Costs Taxes Cash Flow From Operations Total Cash Flow of Investments Total Cash Flow of Project