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A new project will require equipment to manufacture that will cost $5 million, which will be depreciated by straight-line depreciation over five years. In addition,
A new project will require equipment to manufacture that will cost $5 million, which will be depreciated by straight-line depreciation over five years. In addition, there will be $6 million spent on marketing in year one. It is expected that the project will bring in revenues of $10 million per year for five years with production and support costs of $3 million per year. If the firms' marginal tax rate is 35%, what is the cash flow in the second year of this project?
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