The Electronic Measurement and Control Company (EMCC) developed a new laser speed detector. EMCC needs to invest $5 million in new manufacturing facilities. The new manufacturing facilities will be depreciated according to a 7-year MACRS property class. The expected salvage value of the manufacturing facilities at the end of the 5 years is $1.6 million. The detector is expected to bring in $2 million per year of revenue net of costs. EMCC has an income tax rate of 21%.

a. Determine the net income after tax for the 2nd year of operation

b. Determine the after-tax cash flow for the 2nd year of operation