You Are Working on a Bid to Build Two City

question 9

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 $185,000 of equipment that will be depreciated using straight-line depreciation to a zero book value over the 3-year project life.The equipment can be sold at the end of the project for $34,000.You will also need $20,000 in net working capital for the duration of the project.The fixed costs will be $18,000 a year and the variable costs will be $168,000 per park.Your required rate of return is 15 percent and your tax rate is 34 percent.What is the minimal amount you should bid per park? (Round your answer to the nearest $100)

• A)$72,500
• B)$128,600
• C)$154,300
• D)$189,100
• E)$219,900

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Definitions:

Composite Volcanoes

Mountains formed from lava flows and pyroclastic eruptions, typically featuring steep profiles and periodic explosive eruptions.

Normal Faulting

A type of fault where the hanging wall moves downward relative to the footwall, typically occurring in regions undergoing extension.

Scoria

A dark-colored volcanic rock with abundant gas bubbles, typically found around basaltic volcanoes.

Debris Flows

Rapid downhill movement of water-saturated soil, rocks, and vegetation, often triggered by heavy rainfall or rapid melting of snow.