Merrimack, Inc., is considering an investment project that generates a cash flow of $1,900,000 next year if the economy is favorable but generates only $900,000 if the economy is unfavorable. The probability of favorable economy is 60% and of unfavorable economy is 40%. The project will last only one year and be closed after that. The cost of investment is $1,500,000 and Merrimack plans to finance the project with $400,000 of equity and $1,100,000 of debt. Assuming the discount rates of both equity and debt are 0%. What is the expected cash flow to Merrimack s shareholders if the company invests in the project?

a) $400,000

b) $480,000

c) $800,000

d) $0

e) $1,020,000