MCentral Heating Co. is considering a project with the following financial characteristics:

Fixed capital outlay is $1.5 billion

Investment in net working capital is $0.4 billion.

Straight-line depreciation is over a six-year period with 0 salvage value.

Project life is 12 years.

Additional annual revenes are $0.1 billion.

Annual cash operating expenses are reduced by $0.25 billion.

The capital equipment is sold for $0.5 billion in 12 years.

Tax rate is 40%.

Required rate of return is 12%.

If you are sell-side analyst in a security firm, please answer the following question based on the above information:

The after tax operating cash flow for years 1-6 and 7-12 respectively are closet to:

A.

$0.31 billion and $0.21 billion

Please break down this problem to show how the answer was reached. Thanks