John Smith is an analyst who follows the electronics industry. One of the companies he follows, ABC Electronics, has recently announced plans to begin producing and selling a new series of tablet computers.

Smith has received financial projections from senior management for the three-year project. ABC will need to purchase new machinery that is estimated to cost $3.3 million that will be depreciated using straight-line over the projects 3-year life to a salvage value of $0. In addition, ABC estimates that the project will require a one-time injection of working capital of $150,000 at the start of the project to handle the new line of business that will be recovered at project end.

ABC expects to sell 6,000 units each year at a per unit price of $500 for the life of the project. Fixed costs are estimated at $175,000 per year, and variable costs are estimated at $200 per unit. While the asset is fully depreciated over the projects life, ABC internally estimates that machinery will be sold for $350,000 at project end (before applicable taxes). The tax rate is 40%. Smith estimates the appropriate project discount rate to be 14%.

The projects total cash flow in year 0 is an: