Champlain Transportation Inc.is considering a five-year project that requires an initial capital investment of $1 million.The project is expected to generate operating revenue of $500,000 per year, and the associated operating expenses are estimated at $250,000 per year.The capital asset belongs to asset class 9, which has a CCA rate of 30%.The firm's marginal tax rate is 35%.What is the after-tax cash flow for year 1 assuming half-year rule is applicable for CCA in year 1?

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The after-tax cash flow for year 1 is $215,000. This is calculated as follows:Operating revenue: $500,000Operating expenses: $250,000Depreciation (half-year rule): $1,000,000 * 30% * 50% = $150,000Taxable income: $500,000 - $250,000 - $150,000 = $100,000Taxes (35%): $100,000 * 35% = $35,000After-tax cash flow: $500,000 - $250,000 - $150,000 + $35,000 = $215,000