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

Consider the case of Marston Manufacturing Company:

Marston Manufacturing Company is considering a project that requires an investment in new equipment of $$3,570,000.$ Under the new tax law, the equipment is eligible for $100\%$ bonus depreciation at t $=0$ so the equipment will be fully depreciated at the time of purchase. Marston estimates that its accounts receivable and inventories need to increase by $$680,000$ to support the new project, some of which is financed by a $$272,000$ increase in spontaneous liabilities $($accounts payable and accruals$).$ The company's tax rate is $25\%.$

The after$-$tax cost of Marston$$s new equipment is $.$

Marston$$s initial net investment outlay is $.$

Suppose Marston$$s new equipment is expected to sell for $$400,000$ 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 $($NOWC$)$ investment. Remember, that under the new tax law, this equipment was fully depreciated at t $=0.$ If the firm$$s tax rate is $25\%,$ what is the project$$s total termination cash flow?

$$708,000$

$$508,000$

$$300,000$

$$400,000$