Company X is considering establishing a new subsidiary specializing in neurological diseases and selling it after 10 years. For the medical equipment, estimated capital expenditure is $15 million and these will be depreciated over 6 years to zero book value. Yearly revenue projections indicate that Year 1 Revenue will be $12 million and increase 10% every year. The subsidiary is also expected to retain a gross profit margin of 18%. Operational and administrative expenses other than depreciation are projected to be fixed around $0.5 million. Subsidiary will be subjected to 11% corporate tax rate. What are the Operating Cash Flows for year 3?

a.

1,660,000

b.

1,752,000

c.

1,864,000

d.

2,113,600

e.

2,156,100