Which One of the Following Statements Is Correct Concerning Bid

question 5

Multiple Choice

Which one of the following statements is correct concerning bid prices?

• A) The bid price is the maximum price that a firm should bid.
• B) A firm can submit a bid that is higher than the computed bid price and still break even.
• C) A bid price ignores taxes.
• D) A bid price should be computed based solely on the operating cash flows of the project.
• E) A bid price should be computed based on a zero percent required rate of return.

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Definitions:

Inflation Rate

The rapidity with which the general pricing for services and products increases, diminishing the strength of currency.

Risk-Free Rate

The theoretical rate of return on an investment with zero risk, typically associated with government bonds.