Question
Can someone help me with this question? Thanks a lot An investor is considering submitting a bit for the requested project for four houses in
Can someone help me with this question? Thanks a lot
An investor is considering submitting a bit for the requested project for four houses in the next 3 years. To complete the project, the investor needs to buy tools in the amount of $66,000, which would be completely depreciated over the projects lifespan assuming straight-line depreciation, and such tools can be sold for $40,000 at the end of the project.
The Net working capital would be $16,000 over the life span of the project. The projects variable cost would be $88,000 per house, and fixed cost would be $18,000 each year.
The tax rate is 34% and Chris require rate of return is 14%. How much at minimum should the investor bid for each house?
A. $115,000
B. $98,500
C. $97,500
D. $96,500
E. $95,500
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