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SITA Corp. is looking for a project that has annual forecasted sales of $1,000,000. The variable production costs are 60% of sales. The project lasts

SITA Corp. is looking for a project that has annual forecasted sales of $1,000,000. The variable production costs are 60% of sales. The project lasts 10 years. The equipment needed for the project costs $500,000, will be depreciated using MACRS method and has a 5-year MACRS classification (table below). There are no other costs. The tax rate is 20%.

Year 3-Year 5-Year 7-Year 10-Year
1 33.33% 20.00% 14.29% 10.00%
2 44.45% 32.00% 24.49% 18.00%
3 14.81% 19.20% 17.49% 14.40%
4 7.41% 11.52% 12.49% 11.52%
5 11.52% 8.93% 9.22%
6 5.76% 8.93% 7.37%
7 8.93% 6.55%
8 4.45% 6.55%
9 6.56%
10 6.55%
11 3.28%
12

The operating cash flow for year 2 is ___________

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