Acme Manufacturing is considering a project that requires an investment in new equipment of $3,200,000, with an additional $160,000 in shipping and installation costs. Acme estimates that its accounts receivable and inventories need to increase by $640,000 to support the new project, some of which is financed by a $256,000 increase in spontaneous liabilities (accounts payable and accruals).

The total cost of Acmes new equipment is and consists of the price of the new equipment plus the .

In contrast, Acmes initial investment outlay is .

Suppose Acmes new equipment is expected to sell for $200,000 at the end of its four-year useful life, and at the same time, the firm expects to recover all of its net operating working capital investment. The company chose to use straight-line depreciation, and the new equipment was fully depreciated by the end of its useful life. If the firms tax rate is 40%, what is the projects total terminal cash flow?

$464,000

$120,000

$504,000

$200,000