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Epic Foods plan on releasing a new range of sugar-free candies. To produce the new candy range, equipment costing $2 million (inclusive of delivery and

Epic Foods plan on releasing a new range of sugar-free candies. To produce the new candy range, equipment costing $2 million (inclusive of delivery and installation costs) will need to be acquired. The equipment will be depreciated on a straight-line basis over four years. In addition to the above, $5 million will be spent in the first year on advertising the new candy line. The new candies are expected to bring in revenues of $4 million per year for the next four years with production and support costs totaling $1.5 million per year. If Epic Foods' tax rate is 35%, what are the incremental free cash flows in the second year of this project?

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$3.300 million

$1.800 million

$2.000 million

$1.300 million

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