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 net working capital (NWC) 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?

Group of answer choices

$1,800,000; $1,370,000

$1,170,000; $1,270,000

$1,170,000; $1,370,000

$1,800,000; $1,270,000