Jimmy Buffet, Warren's more famous cousin, is considering introducing a new prepackaged mixed drink- the margaritaville margarita miz. Each 1.75 liter bottle costs $2.00 to make and will wholesale $7.00. Packaging machinery will cost $100,000, including shipping and installation. Sales are expected to be 100,000 bottles per year for 4 years after which the people will be tired of drinking margaritas, the equipment will be sold, and the production line will shut down. The equipment will be sold for $60,000 at the end of 4 years. The machinery will be depreciated using the 5-year MACRS depreciation schedule, shown below. Working Capital in the amount of 11% sales will be required at the begininng of the year. Jimmy's tax rate is 40%.

Year 1 2 3 4 5 6

Depreciation % 20.00% 32.00% 19.20% 11.52% 11.52% 5.76%

Calculate the cash flow to be used in the capital budgeting time line in Year 1.

a. 253,392

b. 266,062

c. 279,365

d. 293,333

e. 308,000