GEQ Enterprise is considering a new project. The project will require the purchase of an equipment at the price of RM300,000, and RM100,000 for additional investment in net working capital. The equipment has an 8-year life and will be depreciated straight-line to a zero book value. At the end of the project life, the equipment is expected to be sold at RM50,000. The project is expected to generate annual sales of RM445,000 and reduction in annual maintenance costs of RM130,000. The tax rate is 25 percent and the required rate of return is 10 percent. What is the initial cost of this project?

a. RM337,500

b. RM137,500

c. RM400,000

d. RM440,625