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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