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A firm is considering taking a project that will produce $13 million ofrevenue per year. Cash expenses will be $5 million, and depreciation expenses willbe

A firm is considering taking a project that will produce $13 million ofrevenue per year. Cash expenses will be $5 million, and depreciation expenses willbe $1 million per year. If the firm takes that project, then it will reduce the cashrevenues of an existing project by $1 million. What is the free cash flow on theproject, per year, if the firm is in the 35 percent marginal tax rate?

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