I HAVE ATTACHED TABLE 8.3 THAT THE QUESTION IS TALKING ABOUT.

1 2 3 4 Incremental Earnings Forecast [$000s] 1 Sales 23,500 23,500 23,500 23,500 2 Cost of Goods Sold i9 5001 i9 500} [9 500} {9 500} 3 Gross Profit 14,000 14,000 14,000 14,000 4 Selling, General, and Administrative (3,000} {3,000} {3,000} {3,000} 5 Research and Development {15,000} E Depreciation (1,500:l {1,500} {1,500} {1,500} 11 ,5001' 3' EBIT {15,000} 9,500 9,500 9,500 9,500 {1.500) 3 Income Tax at 20% 3,000 (1,900:I {1,900} {1,900} {1,900} 300 9 Unlevered Net Income {12,000} 1600 1600 1600 1600 [1,2001 Free ash Flow [$0005] 11] Plus: Depreciation 1,500 1,500 1,500 1,500 1,500 11 Less: Capital Expenditures 0:500} _ _ _ _ 12 Less: Increases in NWC {2.100} 2,100 13 Free Cash Flow {19,500} 7,000 9,100 9,100 9,100 2,400