The dividend of Company A has been increasing at 2% a year for many years, and it is expected to continue to increase at this rate in the future.

This year's dividend is $1/share, and was distributed yesterday.

The company has one million shares outstanding.

Suppose the manager of the company just identifies a promising project. To invest in the project, the company will reduce next year's dividend by $0.20 a share. In return, annual dividend will increase by $0.05 a share starting the year after.

The required rate of return of the company's stock is 8% per year.

Stock price today if the company decided NOT to take the project is $17.

What is the NPV of the project?

$350,000

$50,000

$200,000

$1,000,000

$425,000