CA Inc. is considering introducing a new beer line of beer called XX Squared (or Cuatro Equis) bought to you by the Most, Most Interesting, Interesting Man in the World. XX Squared would require a special prepartion process and new equipment. The cost of the new equipment is $500,000 and would require an increase in net working capital of $30,000. Lets assume the new corporate tax laws apply and CA Inc can expense the cost of the new equipment immediately at their marginal federal plus state tax rate is 26%. The expected life of the project is 3 years. CA Inc. has already spent $100,000 on a marketing analysis that shows that sales would increase $400,000 annually and operating costs will be 40% of sales. The expected salvage value at the end of the projects 3 year life is $100,000 (with a book value of sero) and any increases in net working capital during the life of the project will be recovered or liquidated at the end of the projects expected life. The companys marginal tax rate is 26% and the company will have enough other taxable income to more than offset any taxable losses from the XX Squared project. CAs WACC is 10.5%. What is the total year 3 (operating plus terminal) cash flow for the XX Squared project?

	A.	$307,600
	B.	$281,600
	C.	$177,600
	D.	$207,600