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NC is trying to estimate the first-year operating cash flow for a proposed project. The financial...

NC is trying to estimate the first-year operating cash flow for a proposed project. The financial staff has collected the following information:

Proposed sales

$10 million

Operating costs (not including depreciation)

$7 million

Depreciation tax shield

$0.2 million

Interest expense

$1.5 million

The corporate tax rate is 40%. What is the project’s operating cash flow for the first year (t = 1)?

Select one:

a. $2,000,000

b. $1,880,000

c. $1,100,000

d. Neither of the above

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