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Homework answers / question archive / Louie's Leisure Products is considering a project which will require the purchase of $1,4 million in new equipment
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 Networking capital equal to 20% of sales will be required to support the project. All of the networking 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 networking capital changes associated with the project? The project is expected to last 7 years. Multiple Choice $144 087
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