You are evaluating a new product. In year 3 of your analysis, you are projecting pro forma sales of $4.5 million and cost of goods sold of $2.7 million. You will be depreciating a $1.5 million machine for 5 years using straight-line depreciation. Your tax rate is 35%. Finally, you expect working capital to increase from $210,000 in year 2 to $295,000 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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Part 1

Complete the following pro forma statement.(Round to the nearest dollar.)

Pro Forma		Year 3
Sales	$
COGS
Depreciation
EBIT
Tax
Earnings
Depreciation
Net working capital
Free cash flows