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Problem 9-10 You are evaluating a new product. In year 3 of your analysis, you are projecting pro forma sales of $5 million and cost
Problem 9-10
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 depreciating 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?
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