a. Karsted Air Services is now in the final year of a project. The equipment originally cost $20 million, of which 80% has been depreciated. Karsted can sell the used equipment today for $5 million, and its tax rate is 40%. What is the equipment's after-tax salvage value? Round your answer to the nearest dollar. Write out your answer completely. For example, 13 million should be entered as 13,000,000. $________

b.

Project cash flow Colsen Communications is trying to estimate the first-year cash flow (at Year 1) for a proposed project. The financial staff has collected the following information on the project: $10 million Sales revenues Operating costs (excluding depreciation) 7 million Depreciation 2 million Interest expense 2 million The company has a 40% tax rate, and its WACC is 10% Write out your answers completely. For example, 13 million should be entered as 13,000,000. a. What is the project's 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 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 project's cash flow would now be c. Ignore part b. If the tax rate dropped to 30%, how would that change your answer to part a? Round your answer to the nearest dollar. The firm's project's cash flow would increase S by s 100,000