Eisenhower 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	$10 million
Operating costs (excluding depreciation)	7 million
Depreciation	2 million
Interest expense	2 million

The company has a 40% tax rate, and its WACC is 13%.

Write out your answers completely. For example, 13 million should be entered as 13,000,000.

a. What is the project's operating cash flow for the first year (t = 1)?

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?

c. The firm's OCF would now be?