Case $1$: forecast based on no change in any variable $($base case$)$ Case $2$: increase in sales volume $($unit$)$ to $1,400,000.$ Other variables remain constant. Case $3$: increase in unit sales price to $15\mathrm{.}36$ euros. Other variables remain constant. Case $4$: sales volume $($unit$)$ to $1,100,00$; unit sales price to $14\mathrm{.}08$ euros; unit direct cost $10\mathrm{.}00$ euros Balance Sheet Information, End of Fiscal $2013$ Assets Liabilities and net worth Cash $1,600,000$ Accounts payable $800,000$ Accounts receivable $3,200,000$ Short$-$term bank loan $1,600,000$ Inventory $2,400,000$ Long$-$term debt $1,600,000$ Net plant and equipment $4,800,000$ Common stock $1,800,000$ Retained earnings $6,200,000$ Total $12,000,000$ Total $12,000,000$ Assumptions: Accounts receivable, $\%$ sales $25\mathrm{.}00\%$ Inventory, $\%$ direct costs $25\mathrm{.}00\%$ Corporate tax rate $30\mathrm{.}00\%$ Case $1($Base$)$ Case $2$ Case $3$ Case $4$ Exchange rate, $$/1\mathrm{.}20001\mathrm{.}00001\mathrm{.}00001\mathrm{.}0000$ Sales volume $($units$)1,000,0001,400,0001,000,0001,100,000$ Export sales volume $($case $4)$ Sales price per unit $12\mathrm{.}8012\mathrm{.}8015\mathrm{.}3614\mathrm{.}08$ Export sales price per unit $($case $4)$ Direct cost per unit $9\mathrm{.}609\mathrm{.}609\mathrm{.}6010\mathrm{.}00$ Income statement $`$ Sales revenue $12,800,00017,920,00015,360,00015,488,000$ Direct cost of goods sold $9,600,00013,440,0009,600,00011,000,000$ Cash operating expenses $($fixed$)890,000890,000890,000890,000$ Depreciation $($fixed$/$given$)600,000600,000600,000600,000$ Pretax profit $1,710,0002,990,0004,270,0002,998,000$ Income tax expense $513,000897,0001,281,000899,400$ Net income $=$ EBIT$(1-$t$)$; No interest exp $1,197,0002,093,0002,989,0002,098,600$ Free Cash Flow calculation add back depreciation $600,000600,000600,000600,000$ minus capital expenditure $($assumed $0)0000$ minus change in NWC $02,240,000640,0001,022,000$ Free Cash Flow $1,797,000453,0002,949,0001,676,600$ Define NWC $=$ A$/$R $+$ Inv $-$ A$/$P A$/$R $3,200,0004,480,0003,840,0003,872,000$ Inventory $2,400,0003,360,0002,400,0002,750,000$ A$/$P $($assume no change$)800,000800,000800,000800,000$ NWC $4,800,0007,040,0005,440,0005,822,000$ CHANGE in NWC from $201302,240,000640,0001,022,000$ We focus only on the $1$st year for the simplicity's sake. In practice, we estimate all the the free cash flows that will take place in the future. Then discount those to get the present value.