Your firms marginal tax rate is 25%. You are considering an investment in a new piece of equipment. The machinery will cost $3,300,000 and it will be depreciated by the straight-line method over three years. You feel that the machine will have a useful operating life of four years, and that at the end of that time it can be sold for $350,000.

The Marketing Department estimates that in the first year of operation, sales will be $1,500,000 and that after that sales will grow by 7% per year. The Accounting Department estimates that the variable costs will be 25% of sales and fixed costs will be $90,000. You also estimate that you will need to carry $400,000 in net working capital to support the operation during its life.

Based on these figures, what is the estimate of cash flows for the fourth year of the project?

Group of answer choices

$1,228,630

$1,628,630

$1,438,750

$1,241,130