You Are Working on a Bid to Build Four Cabins

question 91

Multiple Choice

You are working on a bid to build four cabins a year for the next three years for a local campground. This project requires the purchase of $66,000 of equipment which will be depreciated using
Straight-line depreciation to a zero book value over the three years. The equipment can be sold at
The end of the project for $40,001. You will also need $16,000 in net working capital over the life of
The project. The fixed costs will be $18,000 a year and the variable costs will be $88,000 per cabin.
Your required rate of return is 14% for this project and your tax rate is 34%. What is the minimal
Amount (rounded to the nearest $500) that you should bid per cabin?

• A) $95,000
• B) $95,500
• C) $97,000
• D) $98,500
• E) $115,000

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Definitions:

Input Module

A component of a modular PLC or control system that receives signals from input devices, such as sensors, and converts them into a form that the processor can use.

Output Module

A component in a control system that facilitates the transfer of digital or analog signals from the controller to actuating devices.

Open Switch

A switch that is in a default state of breaking the circuit, preventing the flow of electrical current until it is closed.