. Coca-Cola is considering two new flavorscherry and vanillafor expansion of one of its product lines. Based on historical and competitive information, the cherry flavor is not quite as popular as the vanilla flavor, but it will endure in the market longer. Both options require an investment of $2.25 million in equipment and modifications. The cherry flavor is expected to have annual profits of $750,000 for the first two years and $500,000 for five more years. The vanilla flavor is expected to initially have annual profits of $950,000 for two years, $650,000 for two years, and $250,000 in its last year. The cost of capital is 16%. How much higher is the equivalent annual cash flow from choosing the financially preferable flavor?

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