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Roads Co. is bidding for constructing 2 bridges per year around Sydney for the next 3...

Roads Co. is bidding for constructing 2 bridges per year around Sydney for the next 3 years. This project requires initial investment of $847,000 in specialized machinery. The machinery will be fully depreciated to zero book value using straight-line depreciation over the life of the project. The machinery can be sold at the end of the project for $415,000. You will also need $165,000 in net working capital over the life of the project. The fixed costs will be $528,000 a year and the variable costs will be $1,640,000 per bridge. The required rate of return is 16 percent for this project and the tax rate is 24 percent. What is the minimal amount, rounded to the nearest $100, the firm should bid per bridge?

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please comment down for any further assistance.

ekkarill92 answered 2 years ago
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