Candance, CEO of Fancy Feet Dance Works is considering a project that would have an 6-year life and would require a $2,098,800 investment in equipment. At the end of 8 years, the project would terminate, and the equipment would have a salvage value of $90,000. The project would require additional working capital $28,000 in the form of an increase in the minimum balance required by their bank and this working capital would be released at the end of the project. The project would provide net income each year as follows:

Sales... * * ......... 5,165,000 Less variable expenses... 3,290,000 Contribution margin.. 1,8750000 Less fixed expenses: Fixed out-of-pocket cash expenses.......... $1,175,000 Depreciation.. 100,000 1,275,000 Net income........." $ 600,000 All of the above items, except for depreciation, represent cash flows. The company's required rate of return is 14%