A. You are upgrading production equipment that will let you make more of your product in the same time.You forecast that total sales will increase by 18% next year, over the present amount of 107,000 units. If your sales price is $18 per unit, what are the incremental revenues next year from the upgrade?

B. Your business is purchasing a $10.3 million machine. It will cost $52,000 to transport and install the machine. The machine has a depreciable life of 5 years and will have no salvage value. The machine will generate incremental revenues of $4.1 million per year along with incremental costs of $1.4 million per year. If your business' marginal tax rate is 35%, what are the incremental earnings (net income) associated with the new machine?

C. You have a depreciation expense of $ 456,000 and a tax rate of 38%. What is your tax shield?

D. Your pro forma income statement shows sales of $1,000,000, cost of goods sold as $500,000, depreciation expense of $100,000, and taxes of $160,000 due to a tax rate of 40%. What are your pro forma earnings? What is your pro forma free cash flow?