A two-year project has the following annual cash flows:

Initial cost (400,000)

12 months later 300,000

24 months later 200,000

The cost of capital is estimated at 15% per annum during the first year and 17% per annum during the second year.

What is the net present value of the project (to the nearest 500)?

a) 32000

b) 2500

c) 12000

d) 9500