Problem:
Cairn 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:
| Projected sales |
$10 million |
| Operating costs (not including depreciation) |
7 million |
| Depreciation |
2 million |
| Interest expense |
2 million |
The company faces a 30% tax rate.
Required:
Question: What is the project's operating cash flow for the first year (t = 1)?
Note: Please answer in proper manner and show all computations