Louie's Leisure Products Is Considering a Project Which Will Require

question 80

Multiple Choice

Louie's Leisure Products is considering a project which will require the purchase of $1.4 million in new equipment. The equipment belongs in a 20% CCA class. Louie's expects to sell the equipment
At the end of the project for 20% of its original cost. Annual sales from this project are estimated at
$1) 2 million. Net working capital equal to 20% of sales will be required to support the project. All of
The net working capital will be recouped at the end of the project. The firm desires a minimal 14%
Rate of return on this project. The tax rate is 34%.
What is the present value of the net working capital changes associated with the project?
The project is expected to last 7 years.

• A) -$144,087
• B) -$95,913
• C) $0
• D) $144,087
• E) $184,837

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Definitions:

Civil Rights Movement

A historic series of events and social movements in the United States aimed at ending racial discrimination and securing African Americans' legal rights.

"Walk to Freedom"

A significant march for civil rights in Detroit, June 1963, described as a demonstration of solidarity for racial justice and equality, preceding the famous March on Washington.

Martin Luther King, Jr.

An American Baptist minister and activist who became the most visible spokesperson and leader in the Civil Rights Movement from 1955 until his assassination in 1968.

Detroit

A major city in the state of Michigan, known for its significant impact on the automotive industry.