You Have the Opportunity to Bid on a Project That

question 80

Multiple Choice

You have the opportunity to bid on a project that involves manufacturing 110,000 units per year for 4 years.The project will require $698,000 in fixed assets that would be depreciated straight-line to zero over the project's life.These assets have an expected pretax salvage value of $149,000 at the end of the project. The project would require $56,000 of net working capital,all of which is recoverable,along with $312,000 in annual expenses.What is the minimum price per unit you should bid on this project if you require a rate of return of 18 percent and have a tax rate of 34 percent?

• A)$5.4723
• B)$6.0184
• C)$4.9272
• D)$5.3133
• E)$5.7040

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Definitions:

Prisoner's Dilemma

A hypothetical game in game theory that demonstrates why two individuals might not cooperate, even if it appears that it is in their best interest to do so.

Diffusion of Responsibility

The tendency for individuals to feel less accountable for their actions or inaction when others are present, often leading to reduced help or intervention.

Cognitive Dissonance

The mental discomfort experienced by a person who holds two or more contradictory beliefs, ideas, or values at the same time.

Bystander Apathy

A psychological phenomenon where individuals are less likely to offer help to a victim when other people are present, often due to the diffusion of responsibility.