I am considering introducing a new line of stout$-$flavored coffee from my Athens$-$based roaster, made in co$-$operation with a popular local brewery. I hire a local marketing firm to evaluate the demand for my new product. They charge me $$15,000$ and their report indicates that I can expect to sell about $$200,000$ in this new product next year. They also analyze the impact on my existing sales and find that I will lose about $$125,000$ in sales of other products by introducing this one.

This translates to about $$44,000$ in free cash flow from the new product, and a loss of about $$27,500$ to existing products in terms of free cash flow. To start the project up in full, I require an investment in fixed assets and net working capital of $$85,000.$

Taking any relevant revenues and costs into account from above, what is your estimate of both the total initial investment and the net free cash flow in the first year?

Question $4$ options:

$$85,000$ cost now, $$44,000$ in free cash flow for year $1$

$$85,000$ cost now, $$16,500$ in free cash flow for year $1$

$$100,000$ cost now, $$44,000$ in free cash flow for year $1$

$$100,000$ cost now, $$16,500$ in free cash flow for year $1$

None of the above