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

question 55

Multiple Choice

Louie's Leisure Products is considering a project which will require the purchase of $1.4 million in new equipment. The equipment will be depreciated straight-line to a zero book value over the 7-year life of the project. 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 recovery amount attributable to net working capital at the end of the project?

• A) $55,200
• B) $81,600
• C) $159,600
• D) $240,000
• E) $424,800

---

Definitions:

Ulnar Grasp

A developmental milestone in infants where they use the fingers and the palm but not the thumb in an attempt to grasp objects, typically observed around 4 to 6 months of age.

Neuron's Cell Body

The part of a neuron that contains the nucleus and most of the cell's organelles, supporting neuronal function.

Neurotransmitters

Chemical substances in the brain that transmit signals from one neuron to another, influencing mental processes and behavior.

Infant Perceptual Development

The progression through which a baby improves its abilities to perceive and process sensory information from the environment.