A proposed project costs $500 today in order to explore its feasibility. If the decision is made to continue the project it will cost an additional $1,500 a year from today. In years two through six, there is a 70% probability that cash flows will be $1,000 per year and a 30% probability that cash flows will be $400 per year. Which cash flow scenario will occur will be known with certainty following the feasibility study. What is the NPV of the project if the appropriate discount rate is 15%?

1. $411.20
2. $627.40
3. $747.25
4. $1,110.57
5. $1,950.00