Colsen Communications is trying to estimate the first-year net operating cash flow (at Year 1) for a proposed project. The financial staff has collected the following information on the project:

Sales revenues $25 million

Operating costs (excluding depreciation) $17.5 million

Depreciation $5 million

Interest expense $5 million

The company has a 40% tax rate, and its WACC is 10%.

a. What is the project's operating cash flow for the first year (t = 1)? Round your answer to the nearest dollar.

b. If this project would cannibalize other projects by $2.5 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 OCF would now be $

c. Ignore Part b. If the tax rate dropped to 35%, how would that change your answer to part a? Round your answer to the nearest dollar. The firm's operating cash flow would increase or decrease by $