Problem:
Eisenhower Communications is trying to estimate the first-year net operating cash flow (at Year 1) for a proposed project. The financial staff has collected the following information on the project: Sales revenues $5 million Operating costs (excluding depreciation) 3.5 million Depreciation 1 million Interest expense 1 million The company has a 40% tax rate, and its WACC is 11%.
Required:
Question: What is the project's operating cash flow for the first year (t = 1)?
Note: Show supporting computations in good form.