14. Lipstick, Inc. is considering replacing an existing tinting system with a new one. The new system would allow for additional colors to be produced and would increase sales revenue by $1,200,000 per year. Additional non-depreciation operating costs would be $800,000 per year. Annual depreciation on the new machine would be 320,000, while annual depreciation on the existing machine is $200,000. Lipstick has a 30% tax rate.

What is the annual differential after-tax cash flow associated with this replacement project?

a. $298,000

b. $304,000

c. $308,000

d. $316,000

e. $324,000