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You are working on a bid to build three amusement parks a year for the next two years. This project requires the purchase of $52,000
You are working on a bid to build three amusement parks a year for the next two years. This project requires the purchase of $52,000 of equipment which will be depreciated using straight-line depreciation to a zero book value over the two years. The equipment can be sold at the end of the project for $34,000. You will also need $16,000 in net working capital over the life of the project. The fixed costs will be $10,000 a year and the variable costs will be $70,000 per park. Your required rate of return is 10 percent for this project and your tax rate is 35 percent. What is the minimal amount, rounded to the nearest $500, you should bid per amusement park? 79,500 68,000 74,000 66,500
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