A Project Will Require $543,000 for Fixed Assets, $118,000 for Inventory

Multiple Choice

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 increase by $65,000. The project has a six-year life. The fixed assets will be depreciated straight-line to a 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. What is the project's cash flow at Time 0?

A) −$536,000
B) −$738,000
C) −$720,000
D) −$779,000
E) −$944,000