Nixon Communications is trying to estimate the first-year operating cash flow (at t = 1) for a proposed project. The financial staff has collected the following information:
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Projected sales
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$10 million
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Operating costs (not including depreciation)
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$7 million
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Depreciation
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$2 million
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Interest expense
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$2 million
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The company faces a 40 percent tax rate. What is the project"s operating cash flow for the first year (t= 1)?