A. XYZ Corp. is considering introducing a new 90" flat screen television/monitor for the consumer market. The company's CFO has collected the following information about the proposed product. The company will have to purchase a new machine to produce the screens. The machine's invoice price would be $4,000,000 and it would cost an additional $20,000 to install the equipment. The project has an anticipated economic life of 4 so the machine will be depreciated on a straight-line basis over 4 years. The company anticipates that the machine will last for four years and then have no salvage value. Last year, a market research study for the new product cost $1 million. If the company goes ahead with the proposed product, it will have an effect on the company's net working capital, At the outset (i.e., at t = 0), inventory will increase by $190,000 and accounts payable will increase by $70,000. At t = 4, the net working capital will be recovered after the project is completed. The company already owns a section of where the facility could be built. The land is estimated have a market value of $2 million. The company plans to sell the land for its current market value if it is not used for this project. The screen is expected to generate sales revenue of $5, 500,000 per year. Each year the operating costs (not including depreciation) are expected to be 2, 525,000. The company's interest expense each year will be $350,000 Because the new product line is similar to another of XYZ's existing products, the new per are expected to reduce the sales the company's current large screen TV's by $500,000 per year. The company's tax rate is 40% What is the initial investment for the project? a. $6, 140,000 b. $4, 140,000 c. $6, 020,000 d. $6, 120,000 e. $6, 280,000 What is the annual expected incremental operating cash flow? a. $882,000 b. $1, 887,000 c. $2, 185,000 d. $2, 187,000 e. $1, 722,000