You are evaluating a new product. In year 3 of your analysis, you are projecting pro forma sales of

$5.8

million and cost of goods sold of

$3.48

million. You will be depreciating a

$2

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

$305,000

in year 3. What are your pro forma earnings for year 3? What are your pro forma free cash flows for year 3?