A company is considering launching a new product line featuring protein bars coated with deluxe chocolate flavors. The company has spent $$75,000$ developing a new protein bar line as a part of the company$$s product diversification plan. It also spent another $$40,000$ for market research on flavors to produce. Based on market research, the company expects in the first year to sell $1,200,000$ protein bars at a price of $$2\mathrm{.}45$ each, with an expected annual growth of $3\%$ in sales volume for years two through six.

The variable costs per unit are $$0\mathrm{.}80,$ while the annual fixed costs are $$30,000.$ The company estimates that the net working capital will be $8\%$ of next year$$s sales. Assume all net working capital will be recovered at the end of the project.

To expand production capacity for this new product line, the company is required to have an initial investment of $$700,000$ in factory equipment. The equipment will be depreciated straight$-$line for six years and is expected to have a $$125,000$ salvage value. Based on the operations department$$s best estimate, the company can sell the factory equipment for $$180,000$ at the end of year six.

The company$$s Tax Rate is $20\%,$ and its cost of capital is $7\mathrm{.}6\%.$ However, the finance team suggests that the appropriate project discount rate should be higher as the company has no prior experience in making protein bars. The Market Risk Premium is $7\%,$ and the risk$-$free rate is $4\%.$ The company$$s Beta is $1\mathrm{.}20,$ while the project is deemed to be three times riskier.

Rounded to the nearest dollar, what will be the terminal cash flows in year $6?$

Multiple Choice

$$2,380,344$

None of the answers here are correct.

$$2,273,188$

$$2,104,188$

$$2,000,457$