Elaine Smith of General Pacific Company is analyzing a 5-year expansion project to increase manufacturing capacity. The project requires an investment in net working capital of $500,000 that will be recovered at the end of the project and has a cost of capital of 10%. In her analysis, Smith assumes that the two cash flows net out to zero over the life of the project, so she does not include a cash flow for net working capital at the beginning of the end of the project. Assuming she correctly analyzes all the other components of the project, Smith has likely:

a.overestimated the project's cash flow by approximately $310,000.

b.underestimated the project's net present value by approximately $310,000.

c.overestimated the project's net present value by approximately $190,000.