Problem $12\mathrm{.}02($Project Cash Flow$)$

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Colsen Communications is trying to estimate the first$-$year cash flow $($at Year $1)$ 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 on the project:

Sales revenues $$15$ million

Operating costs $12$ million

Interest expense $3$ million

The company has a $25\%$ tax rate, and its WACC is $14\%.$

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

a$.$ What is the oroiect's operating cash flow for the first year