Consider the case of Newcastle Coal Company:

Newcastle Coal Company 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. Newcastle 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 Newcastles new equipment is 1. $________ and consists of the price of the new equipment plus the 2. (?? asset's installation, shipping, and delivery costs / project's additional accounts receivable investment / asset's salvage value).

In contrast, Newcastles initial net investment outlay is 3. $_________ .

4. Suppose Newcastles 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 termination cash flow?

a. $120,000

b. $504,000

c. $464,000

d. $200,000