A project will require $543,000 for fixed assets, $118,000 for inventory, and $142,000 for accounts receivable. Short-term debt is expected to decrease by $65,000. The project has a six-year life. The fixed assets will be depreciated straight-line to zero book value over the life of the project. No bonus depreciation will be taken. The project is expected to generate annual sales of $905,000 with costs of $730,000. For the project analysis, what amount should be used as the initial cash flow for net working capital?

1. $41,000

2. $325,000

3. $89,000

4. $195,000

5. $543,000