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After a year of marketing research, 2Cups Inc. has decided to launch its new product. The equipment needed for the project costs $41 million and

After a year of marketing research, 2Cups Inc. has decided to launch its new product. The equipment needed for the project costs $41 million and will be depreciated using MACRS method and has a 7-year MACRS classification (table below). The project lasts 10 years. Estimated sales are $40 million a year. The annual variable production costs are 65% of sales. Cash fixed costs are $3.5 million a year. There are no other costs. The tax rate is 24%.

Year 3-Year 5-Year 7-Year 10-Year
1 33.33% 20.00% 14.29% 10.00%
2 44.45% 32.00% 24.49% 18.00%
3 14.81% 19.20% 17.49% 14.40%
4 7.41% 11.52% 12.49% 11.52%
5 11.52% 8.93% 9.22%
6 5.76% 8.93% 7.37%
7 8.93% 6.55%
8 4.45% 6.55%
9 6.56%
10 6.55%
11 3.28%
12

What is operating cash flow (in millions) for year 2?

Show your answer to the nearest 2 decimals.

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