Question $6$

$0\mathrm{.}5pts$

ULUL fashion is evaluating a new project. At the beginning of the project, the company will need $$375,000$ for plants, $$120,000$ for inventory. Accounts receivable is expected to increase by $$80,000$ and accounts payable is expected to increase by $$130,000.$ Long$-$term debt is expected to increase by $$125,000.$ The project has a $6-$year life. The fixed assets will be depreciated straight$-$line to a zero$-$book value over the life of the project. At the end of the project, the fixed assets can be sold for $25\%$ of their original cost. The net working capital is recovered in full at the end of the project. The project is expected to generate annual sales of $$625,000$ and costs of $$385,000.$ The tax rate is $21\%$ and the required rate of return is $12\%.$

RECOVERY OF NET WORKING CAPITAL

At the end of the project, what would be the expected recovery of net working capital?

$$445,000$

$$200,000$

$$70,000$

$$195,000$ULUL fashion is evaluating a new project...