A Proposed Project Will Require $410,000 in Fixed Assets That

question 14

Multiple Choice

A proposed project will require $410,000 in fixed assets that would be depreciated straight-line to zero over the 3-year life of the project.These assets have an expected aftertax salvage value of $110,000 at the end of the project.The project would require $48,000 of net working capital,all of which is recoverable,along with $220,000 in annual expenses.What is the minimum annual price you should bid on this project if you require a rate of return of 17 percent and have a tax rate of 30 percent?

• A)$410,208
• B)$393,760
• C)$408,211
• D)$427,009
• E)$367,984

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Definitions:

Logistics Cost Centers

Areas within a company's logistics operation that are responsible for specific expenses, helping in budgeting and financial tracking.

Least Cost Analysis

A method used to minimize costs of achieving a specific objective, commonly used in decision-making for choosing the most cost-effective option.

Short-Run Analysis

An examination of the performance or behavior of a firm or model over a short period, focusing on immediate costs and outcomes.

Cost Center Analysis

The process of evaluating the costs associated with a specific business unit or department, without directly attributing to revenue generation, aiming to optimize efficiency.