Ashley Ardern has been researching a vaccine for Covid-19. The cost of the research efforts has already amounted to $500,000.

If Ashley Ardern carries on the research efforts additional lab space and equipment will need to be purchased for $1,000,000 to ensure adequate social distancing is maintained. At the end of a 2 year period, it is estimated that the salvage value of the equipment will be $0.

The results of the research are expected to result in a vaccine that will generate positive cash flows for two years. The estimated after-tax operating cash inflows are $572,000 in year 1 and $744,000 in year 2. The operating cash flows are earned evenly throughout the year.

Additional working capital of $100,000 will be required at the start of the project.

The company has an after-tax required rate of return of 10% per annum.

Question: The initial investment is:

Group of answer choices

a $900,000.

b $1,000,000.

c $1,100,000.

d $1,300,000.