ABC is considering a new 5-year project. ABC owns the building that the project needs to use, but it currently rents out the entire building for $100,000 per year. The building was purchased for $2 million in the past. The new project will use the entire building and require new equipment that will cost $1.5 million. The equipment can be fully depreciated straight-line over the next 5 years. There will also be an increase in net working capital of $200,000 in year 0, and the NWC will be fully recovered at the end of the project. The EBIT from the project is expected to be $1 million per year starting in year 1. If the marginal tax rate is 30%, what is the estimated free cash flow in year 4? a) -$1,700,000 b) $720,000 c) $930,000 d) $1,130,000 e) None of the above

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