Your company has spent $340,000 on research to develop a new computer game. The firm is planning to spend $54,000 on a machine to produce the new game. Shipping and installation costs of the machine will be capitalized and depreciated; they total $6,400. The machine has an expected life of 7 years, a $39,000 estimated resale value, and falls under the MACRS 10-Year class life. Revenue from the new game is expected to be $440,000 per year, with costs of $240,000 per year. The firm has a tax rate of 40 percent, an opportunity cost of capital of 13 percent, and it expects net working capital to increase by $64,000 at the beginning of the project. What will be the net cash flow for year one of this project?

• $122,416
• $120,000
• $2,416
• $-62,816