A new investment project requires a purchase of a new equipment with a cost of $895,000 , which will be depreciated straight-line to zero over its 4-year life. The investment lasts for four years, and will bring in an annual operating cash flow of $255,000. At the end of the four years, the equipment will be sold and result in an after tax salvage value of $31,000 . The investment will require an investment of working capital of $24,000 , initially and will be fully recovered at the end of year four. Assume the discount rate is 15 percent and the tax rate is 28 percent.

What is the year 0 cash flow?

Multiple Choice

• -$864,000

• -$640,000

• -$919,000

• -$664,000