1. Hoover Manufacturing is trying to estimate the Year 1 operating cash flow for a proposed project. The assets required for the project were fully depreciated at the time of purchase. The financial staff has collected the following information:

   Sales revenues	$13.3 million
   Operating costs	7.6 million
   Interest expense	1.4 million

   Hoover has also determined that this project would cannibalize one of its other projects by $1.7 million of cash flow (before taxes) per year. The firm has a 35 percent tax rate, and its WACC is 8 percent. Calculate the projects operating cash flow for Year 1.

   	a.	$2,795,000
   	b.	$655,000
   	c.	$1,690,000
   	d.	$2,600,000
   	e.	$3,705,000