Question
Man enterprises is working on a bid to build two apartment buildings a year for the next 5 years for a local college. this project
Man enterprises is working on a bid to build two apartment buildings a year for the next 5 years for a local college. this project requires the purchase $1,000,000 of equipment that will be depreciated using straight-line depreciation to a zero book value over the project's life. the equipment can be sold at the end of the project for $225,000. you will also need $180,000 in net working capital over the life of the project. the fixed costs will be $628,000 a year and the variable costs will be $1,298,000 per building. your required rate of return is 14.5 percent for this project and your tax rate is 35%. what is the minimal amount the company should bid per building?
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