Show how you derived your pro forma income statement calculations and final pro forma cash flow analysis. Thus, all of your calculations should cascade to eventually solving for a final solution, which is your net present value (NPV) and Internal Rate of Return (IRR) results. Once you have the pro forma model created, please briefly describe your results and how various changes in unit volume, price, and costs can change your valuation results. This analysis includes the 20% increase and decrease in sales volumes.

Barton PC is a small-cap computer company located in Wilson NC. The company operations officer, Nancy Simpson, is also part owner in the company. Nancy started the company in the mid-90’s as a producer of small laptop computers. Over the years, laptop computer usage has slowly declined as consumers have moved to more mobile-centric devices. To capture this growing trend, Barton PC created the Barton-1 smartphone. The phone comes in just one model and has generated excellent sales. As with all modern electronics however, technology changes rapidly and the company is concerned sales will fall as new and existing competitors enter the market.
To ensure continued robust sales, Barton PC has spent $750,000 to develop a new prototype smartphone with new and enhanced features. To more fully understand the expected sales of the phone, a marketing study for $200,000 was also conducted
Nancy estimates the new phone’s variable manufacturing cost will be $205 per unit. Fixed costs for the project are estimated to run $5.1 million per year. The estimated 5-year sales volumes for the new phone are as follows: 64,000, 106,000, 87,000, 78,000 and 54,000 per year. Based on market research, Nancy feels the phone can be sold for $485 per phone. However, Nancy also finds there will be considerable upstart costs to start production. New equipment will be purchased for $34.5 million and will be depreciated on a seven-year MACRS schedule. It is believed the market value of the equipment in 5 years will be fully depreciated.


Net working capital for the phone will be 20% of sales and will occur with timing of the cash flows each year. In this case there are no startup costs for networking capital. Changes in net working capital will thus start when sales occur in year 1. The company has a 35% corporate tax rate and a required return on capital of 12%.

To ensure the phone creates value for the company, Nancy has requested a valuation analysis for the project. Specifically, she would like to see the net present value (NPV) and internal rate of return (IRR) for the phone over the 5-year expected sales. She would also like to see how these metrics change with various unit sales scenarios or 20% less and 20% more in unit volume sales.

Answer:How is pro forma income statement calculated?

Image result for Show how you derived your pro forma income statement calculations and final pro forma cash flow analysis. This, all of your calculations should cascade to eventually solving for a final solution, which is your net present value (NPV) and Internal Rate of Return (IRR) results.

How to Create A Pro Forma Income Statement

Sales (or Revenue) - Cost of Goods Sold = Gross Income (or Gross Earnings)

Gross Income (or Gross Sales/Earnings) - Operating Expenses = Operating Income.

Operating Income - Depreciation = EBIT.

EBIT - Interest Expense = EBT.

EBT – Taxes = Net Income (Net Earnings, EAT, Profits)

Step-by-step explanation:

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O SSS
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One method of slowing the growth of an insect population without using pesticides is to introduce into the population a number of sterile males that mate with fertile females but produce no offspring. If P represents the number of female insects in a population, S the number of sterile males introduced each generation, and r the population's natural growth rate, then the female population is related to time t by
t =
P+S
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dP

Suppose an insect population with 10,000 females grows at a rate of r = 0.10 and 900 sterile males are added in each generation. Evaluate the integral to give an equation relating the female population to time. (Note that the resulting equation cannot be solved explicitly for P.)

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Jerome makes and sells his own energy drinks. He mixes a liquid drink mix with water to create his own special blend. Jerome usually uses 8 cups of water and 3 cups of drink mix. Tomorrow, there is a road race in town, however, and Jerome thinks he’ll be able to sell a lot more of his energy drinks than usual. Jerome’s brother told him to add one cup of water for every one cup of drink mix he added to keep the ratio of water to drink mix the same and still increase the total amount of energy drink. Jerome’s sister told him to multiply both the amount of water and the amount of drink mix by the same number to keep the ratio the same and still increase the total amount of energy drink. Who is correct: Jerome’s brother or Jerome’s sister? As you complete the task, keep this question in mind: Based on what you know about ratios, what do you think the answer will be? Directions: Complete each task, reading the directions carefully as you do. You will be graded on the work you show, or your solution process, in addition to your answers. Make sure to show all your work and to answer each question as you complete the task. Type all of your work into this document so you can submit it to your teacher for a grade. You will be given partial credit based on the work you show and on the completeness and accuracy of your explanations. Your teacher will give you further directions on submitting your work. You may be asked to upload the document, e-mail it to your teacher, or hand in a hard copy. Now let’s get started! Step 1: Finding the part-to-part and part-to-whole ratios To make his special energy drink, Jerome uses 8 cups of water and 3 cups of drink mix. What is the ratio of water to drink mix? (2 points) What is the ratio of drink mix to water? (2 points) What is the ratio of drink mix to mixed energy drink? (2 points) What is the ratio of water to mixed energy drink? (2 points) Step 2: Testing Jerome’s brother’s approach Jerome’s brother told him to add one cup of water for every one cup of drink mix he add