Suppose that the Dr. Pepper Snapple Group, Inc. (DPS) is considering adding a new product line. Currently, DPS sells Motts apple juice and is considering selling a new fruit drink. DPS has spent $650,000 to develop and test market the new product, and the new fruit drink will initially be introduced to a limited regional market in order to better gauge demand before taking it national.This introduction stage will last four years. During this introductory stage, the fruit drink will have a selling price of $1.64 per unit.The current plant facility in this region has excess capacity in a fully depreciated building to process the fruit drink product line.The new equipment costs $2,500,000 and is depreciated to zero under the 3-year MACRS depreciation schedule. Projected sales are 4,000,000 units in the first year, with a 9% growth rate for each subsequent year. Variable costs are 60% of total revenues, and fixed costs are $1,250,000 per year. Currently, similar projects in the portfolio of DPS require $0.14 in net working capital (NWC) to support each dollar of sales in each year. In other words, as sales revenue changes, NWC will adjust to support this change. The NWC needed for each sales year must be in place at the beginning of that year (i.e., by the end of the previous year). All changes to NWC will be liquidated and recovered by project-end, and the new equipment is forecasted to have a salvage value of $500,000 at this time. The corporate tax rate for DPS is 40%.