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	Year 1	Year 2	Year 3
	Sales (units)		10,000	15,000	20,000
	Selling Price (per unit)		20	30	40
	Costs (per unit)		15	20	25
Investments: (in 000s)		Year 0	Year 1	Year 2	Year 3
1	Widget Machine	-300			50
2	Accumulated Depreciation		50	150	300
3	Adjusted Basis of Machine After Depreciation		250	150	0
4	Warehouse Opportunity Cost	-100			100
5	Net Working Capital	30	30	37.5	0

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