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1.      Schiller Construction Inc. has estimated the following revenues and expenses related to phase I of a proposed new housing development. Incremental sales= $2,000,000, total cash operating expenses $1,200,000, depreciation $300,000, taxes 35%, interest expense, $120,000. What is the operating cash flow associated with phase I of the development? 

2.      Jefferson Corporation is considering an expansion project. The necessary equipment could be purchased for $10 million and shipping and installation costs are another $200,000. The project will also require an initial $1 million investment in net working capital. The company's tax rate is 37%. What is the project's initial investment outlay? 

3.    Diamond Inc., has estimated that a new building will cost $1,000,000 to construct. Land was purchased a year ago for $300,000 and could be sold today for $400,000. An environmental impact study was performed at a cost of $50,000. For capital budgeting purposes, what is the relevant cost of the new building?