QUESTION 1 Washington Industries is considering an expansion. The necessary equipment would be purchased for $6 million and will be fully depreciated at the time of purchase. The expansion would also require an additional $4 million investment in working capital. The tax rate is 35 percent. Last year, the company spent and expensed $400,000 on research related to the project. The company plans to house the project in an unused building it owns. If the building were sold, it would net $2 million after taxes and real estate commissions. What i the initial investment outlay for this project after bonus depreciation is considered? O a. $12.0 million O b. $10.4 million O c. $7.9 million O d. $9.9 million O e. $12.4 million QUESTION 2 Hoover Publishing 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 $13.5 million 9,9 million Operating costs Interest oxpense 1.7 million Hoover has also determined that this project would cannibalize one of its other projects by $1.4 million of cash flow (before taxes) per year. The firm has a 20 percent tax rate, and its WACC is 11 percent. Calculate the project's operating cash flow for Year 1. O a $ 500,000 O b. $1,760,000 O c. $400,000 O d. $1,520,000 O e. $2,880,000 QUESTION 3 Garfield Manufacturing is now in the final year of a project. The equipment originally cost $50 million, of which 100 percent has been depreciated. Garfield can sell the used equipment today for $2.7 million, and its tax rate is 35 percent. What is the equipment's after-tax net salvage value? O a $2,540,000 O b. $1,755,000 O c. $3,645,000 O d. $19,255,000 O e $945,000