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 value of the depreciation tax shield in year 2 of the project?

A) $134,000
B) $220,000
C) $340,000
D) $400,000
E) None of the above