You Are Working on a Bid to Build Two City

question 86

Multiple Choice

You are working on a bid to build two city parks a year for the next three years. This project requires the purchase of $249,000 of equipment that will be depreciated using straight-line depreciation to a zero book value over the three-year project life. Ignore bonus depreciation. The equipment can be sold at the end of the project for $115,000. You will also need $18,000 in net working capital for the duration of the project. The fixed costs will be $37,000 a year and the variable costs will be $148,000 per park. Your required rate of return is 14 percent and your tax rate is 21 percent. What is the minimal amount you should bid per park? (Round your answer to the nearest $100)

• A) $212,500
• B) $208,400
• C) $214,300
• D) $214,100
• E) $208,200

---

Definitions:

Checkable Deposit

Deposits in bank accounts that can be withdrawn or transferred through checks, debit cards, or electronic means readily without restrictions.

Personal Balance Sheet

A financial statement that summarizes an individual's financial position at a certain point in time, showing assets, liabilities, and net worth.

Checking Deposit

A bank account that allows for the deposit and withdrawal of money for daily transactions, typically offering easy access through checks, ATMs, and electronic transfers.

Security

Measures or mechanisms that ensure the protection of data, resources, and systems from threats and unauthorized access.