A company is evaluating a new product proposal that will last 6 years.

The initial outlay is $2 million. The proposed product selling price is $220 per unit and the variable costs are $55 per unit and sales are planned to be 2,750 units each year. The incremental cash fixed costs for the product will be $3,750 per annum.

What is the NPV of this project if the cost of capital is 10%? (use annuity table)

a.

$190,600

b.

-$190,600

c.

$40,250

d.

-$40,250