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

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