$2.$ Incremental costs $-$ Initial and terminal cash flow

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 Newcastle$$s new equipment is $$3,360,000$ and consists of the price of the new equipment plus the asset$$s installation, shipping, and delivery costs $.$

In contrast, Newcastle$$s initial net investment outlay is $.$

Suppose Newcastle$$s new equipment is expected to sell for $$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 firm$$s tax rate is $40\%,$ what is the project$$s total termination cash flow?

$$120,000$

$$504,000$

$$464,000$

$$200,000$