You are evaluating a new product. In year 3 of your​ analysis, you are projecting pro forma sales of ​$5.9 million and cost of goods sold of ​$3.54 million. You will be depreciating a ​$2 million machine for 5 years using​ straight-line depreciation. Your tax rate is 33​%. ​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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A: Net present value(NPV)  is the difference  between present value of all cash inflows and initial…

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A: Net Present Value:NPV measures the potential increase in wealth that an investment can generate. To…

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Q: our firm is cons

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A: Depreciation per year = ($790,000 - $255,000) / 5.= $107,000.

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A: Net present value of perpetual cash flows can be determined using the following formula

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A: ParticularsRemark012345RevenueGiven         7,00,000.00         7,00,000.00         7,00,000.00…

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A: The question is based on the concept of Financial Management.

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A: Solution:- Depreciation is a tax deductible expense and therefore companies get tax shield on…

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.