Sunk costs and opportunity costs - Masters Golf Products, Inc. spent 4 years and $1,160,000 to develop its new line of club heads to replace a line that is becoming obsolete. To begin manufacturing them, the company will have to invest $1,850,000 in new equipment. The new clubs are expected to generate an increase in operating cash inflows of $746,000 per year for the next 14 years. The company has determined that the exiting line could be sold to a competitor for $248,000.

a. how should the $1,160,000 in development costs be classified?

b. how should the $248,000 sale price for the existing line be classified?

c. what are all the relevant cash flows for years 0 through 14 (note: that all of the numbers are net of taxes)?