Johnson Inc. finally decided to undertake an expansion project which involved $2 million of R&D expenses in the previous two years before the project. The necessary equipment could be purchased for $9 million, and the project would also require an initial $3 million investment in net operating working capital and $0.5 million for installation and testing. (a) What is the project's initial investment outlay? (4 marks) The firm also wants to estimate the first year operating free cash flow (at t=1) for the project. The following information is collected: Projected sales $10 million Operating costs 7 million Capital cost allowance 2 million Interest expense in year one 1 million Additional capital expenditure in year one 1 million Additional material inventory cost in year one 0.5 million (b) What is the project's free cash flow for the first year if the firm's tax rate is 28%? (6 marks)