A 3-year project requires the acquisition of equipment that cost $3 million (including shipping and installation) and a $700,000 structure to be built on a plot of land Whose current appraised value $180,000. If the project takes off, it will require an initial investment of $200,000 in NWC. The project manager has received a guarantee from the parent company that, in three years, it will repurchase the structure (including the plot of land) at $800,000 (with no tax implication since it is an internal transaction). Assume no depreciation expense for the structure. The project manager estimates that the salvage value of the equipment at $1,900,000 at the end of year three. Assume 25% tax rate. Calculate the initial outlay needed to start the project:

		$3,880,000
		$4,080,000
		$3,700,000
		$30,000,000

The $3 million equipment will be depreciated on a straight-line basis over the next three years. Assuming that the equipment has a useful life of five years, calculate the book value of the equipment at the end of year three.

		$780,000
		$0
		$672,000
		$1,200,000