Question 17

A firm is considering taking a project that will produce $12.5 million of revenue per year. Cash expenses will be $6 million, and depreciation expenses will be $1.2 million per year. The project would also reduce the cash revenues of an existing project by $0.8 million. What is the free cash flow on the project, per year, if the firm is in the 40 percent marginal tax rate?
A)	$2.4 million
B)	$3.4 million
C)	$2.9 million
D)	$3.9 million