Colsen 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: $15 million

Operating costs (excluding depreciation): 10.5 million

Depreciation: 3 million

Interest expense: 3 million

The company has a 40% tax rate, and its WACC is 12%. Write out your answers completely. For example, 13 million should be entered as 13,000,000.

A.) What is the project's operating cash flow for the first year (t = 1)? Round your answer to the nearest dollar.

B.)If this project would cannibalize other projects by $1.5 million of cash flow before taxes per year, how would this change your answer to part a? Round your answer to the nearest dollar.

The firm's OCF would now be:

C.) Ignore Part b. If the tax rate dropped to 35%, how would that change your answer to part a? Round your answer to the nearest dollar.

The firm's operating cash flow would: (Increase/Decrease)

by: