Your company is considering a machine that will cost $1000 at Time 0 and which can be sold after 3 years for a $100 gain. To operate the machine, $200 must be invested at Time 0 in net operating working capital for inventory; these funds will be recovered when the machine is retired at the end of Year 3. The machine will produce sales revenue of $900/year for 3 years; variable operating costs(excluding depreciation) will be 50 percent of sales. The machine will have depreciation expenses of $500, $300, and $200 in Years 1, 2, and 3, respectively. The company has a 40 percent tax

rate

What is the terminable cash flow that is added to the operating cash flow at time period 3?

a. $60

b. $140

c. $260

d. $100