Trixter Manufacturing, Inc. is considering a 3-year project that will require the purchase of new equipment that costs $400,000 in Year 0. In Year 0, inventories will rise by $60,000 and accounts payable will rise by $10,000. Net working capital will not change in Years 1 and 2 and will be fully recovered in Year 3. In Years 1 through 3, the firm expects sales of $220,000 per year and operating costs of $154,000 per year. In Year 3, the firm expects to sell the equipment for $50,000. The equipment has a four-year MACRS depreciation schedule with the following rates: 33% in Year 1, 45% in Year 2, 15% in Year 3, and 7% in Year 4. The tax rate is 40%. What is the projects expected cash flow in Year 3?

$354,800

$254,800

$554,800

$154,800

$454,800