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Johnson Communications is trying to estimate the first-year operating cash flow for a proposed project on which it has collected the following information: Sales revenues

Johnson Communications is trying to estimate the first-year operating cash flow for a proposed project on which it has collected the following information:

Sales revenues

$10.5 million

Operating costs (excluding depreciation)

7.1 million

Depreciation

2.5 million

Interest expense

1.2 million

Johnsons financial staff has also determined that this project would cannibalize one of the firms other projects by $1.1 million of cash flow (before taxes) per year. Johnson has a 35 percent tax rate, and its WACC is 9 percent. Calculate the projects operating cash flow for Year 1.

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