Sunk costs and opportunity costs Masters Golf Products, Inc., spent 4 years and $1,190,000 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 $1,750,000 in new equipment. The new clubs are expected to generate an increase in operating cash inflows of $751,000 per year for the next 14 years. The company has determined that the existing line could be sold to a competitor for $256,000. a. How should the $1,190,000 in development costs be classified? b. How should the $256,000 sale price for the existing line be classified? c. What are all the relevant cash flows for years 0 thru 14? (Note: Assume that all of these numbers are net of taxes.)