Question
A project is going on a bid to build two parks a year for the next three years. An equipment is required for this project
A project is going on a bid to build two parks a year for the next three years. An equipment is required for this project which costs $400,000. The method of the depreciation is straight-line depreciation to zero book value. Salvage value of the equipment after three years $100,000. Initial working capital requirement is $24,000. Annual fixed costs are $400,000 and variable costs for each park will be $250,000. The required rate of return that should be considered to evaluate this project is 15%. The company pays tax at 35%. Find the minimal amount company should bid for each park?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started