Initial and terminal cash flows

Acme Manufacturing is considering a project that requires an investment in new equipment of $$3,600,000,$ with an additional $$180,000$ in shipping

and installation costs. Acme estimates that its accounts receivable and inventories need to increase by $$720,000$ to support the new project, some of

which is financed by a $$288,000$ increase in spontaneous liabilities $($accounts payable and accruals$).$

The total cost of Acme's new equipment is

and consists of the price of the new equipment plus the

In contrast, Acme's initial investment outlay is $.$

Suppose Acme's new equipment is expected to sell for $$600,000$ 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 firm's tax rate is $40\%,$ what is the project's total terminal cash flow?

$$600,000$

$$672,000$

$$360,000$

$$792,000$