Cartman Ventures has spent $50,000 investigating the feasibility of establishing a new underwear factory. It would cost $2,000,000 to acquire the land for the factory and $8,000,000 to construct the factory building. Additional start-up costs include $1,500,000 for new machinery and $100,000 to relocate some equipment from Cartman's other factories. The equipment relocation cost would be tax-deductible at the time of payment. In addition, Cartman would have to increase its inventory levels by $100,000

The new factory is expected to increase Cartman's annual underwear sales by $2,500,000. However, the annual cost of goods sold is expected to increase by $180,000 and Cartman's wage bill would increase by $700,000.

Cartman regards the new factory as a 10-year project. At the end of that period, the factory building is expected to have a scrap value of $1,000,000 and the land is expected to be worth $3,000,000. The tax office has ruled that the building can be depreciated straight-line over 10 years, while the land is a non-depreciating asset. The tax office has also indicated that any profit made from selling the land will not be taxable.Cartman is taxed at 30% on its taxable income.

What is the total cash flow from closing down the project (i.e. excluding the annual operating cash flow)?

Group of answer choices

None of the other answers is correct

$4,100,000

$4,000,000

$3,800,000

$3,700,000