Question
In: Finance
You are working on a bid to build two city parks a year for the next...
You are working on a bid to build two city parks a year for the next three years. This project requires the purchase of $210,000 of equipment that will be depreciated using straight-line depreciation to a zero book value over the 3-year project life. The equipment can be sold at the end of the project for $34,000. You will also need $21,000 in net working capital for the duration of the project; all net working capital will be recovered at the end of the project. The fixed costs will be $19,000 a year and the variable costs will be $150,000 per park. Your required rate of return is 12 percent and your tax rate is 34 percent. What is the minimal amount you should bid per park? (Round your answer to the nearest $100)
Solutions
jeff jeffy answered 6 months agoRelated Solutions
You are working on a bid to build two city parks a year for the next...
You are working on a bid to build two city parks a year for the
next three years. This project requires the purchase of $185,000 of
equipment that will be depreciated using straight-line depreciation
to a zero book value over the 3-year project life. The equipment
can be sold at the end of the project for $34,000. You will also
need $20,000 in net working capital for the duration of the
project. The fixed costs will be $18,000 a year...
. You are working on a bid to build two city parks a year for the...
. You are working on a bid to build two city parks a year for
the next three years. This project requires the purchase of
$180,000 of equipment that will be depreciated using straight-line
depreciation to a zero book value over the 3-year project life. The
equipment can be sold at the end of the project for $34,000. You
will also need $20,000 in net working capital for the duration of
the project. The fixed costs will be $16,000 a...
F- You are working on a bid to build two city parks a year for the...
F- You are working on a bid to build two city
parks a year for the next three years. This project requires the
purchase of $249,000 of equipment that will be depreciated using
straight-line depreciation to a zero book value over the three-year
project life. Ignore bonus depreciation. The equipment can be sold
at the end of the project for $115,000. You will also need $18,000
in net working capital for the duration of the project. The fixed
costs will...
You will bid to supply 5 Navy Destroyers per year for each of the next three...
You will bid to supply 5 Navy Destroyers per year for each of
the next three years to the U.S. Navy. To get set up you will need
$90 million in equipment, to be depreciated straight-line to zero
over the next three years, with no salvage value. Total fixed costs
per year are $10 million, and variable costs are $15 million per
Destroyer. Assume a tax rate of 35 percent and a required return of
12 percent. What are total...
You will bid to supply 5 Navy Destroyers per year for each of the next three...
You will bid to supply 5 Navy Destroyers per year for each of
the next three years to the U.S. Navy. To get set up you will need
$90 million in equipment, to be depreciated straight-line to zero
over the next three years, with no salvage value. Total fixed costs
per year are $10 million, and variable costs are $15 million per
Destroyer. Assume a tax rate of 35 percent and a required return of
12 percent. What is the...
You will bid to supply 5 Navy Destroyers per year for each of the next three...
You will bid to supply 5 Navy Destroyers per year for each of
the next three years to the U.S. Navy. To get set up you will need
$90 million in equipment, to be depreciated straight-line to zero
over the next three years, with no salvage value. Total fixed costs
per year are $10 million, and variable costs are $15 million per
Destroyer. Assume a tax rate of 35 percent and a required return of
12 percent. What is the...
You will bid to supply 5 Navy Destroyers per year for each of the next three...
You will bid to supply 5 Navy Destroyers per year for each of
the next three years to the U.S. Navy. To get set up you will need
$90 million in equipment, to be depreciated straight-line to zero
over the next three years, with no salvage value. Total fixed costs
per year are $10 million, and variable costs are $15 million per
Destroyer. Assume a tax rate of 35 percent and a required return of
12 percent. What is the...
We are working on a project. Two companies have bid on the project and we are...
We are working on a project.
Two companies have bid on the project and we are choosing from
two machines.
This is a mutually exclusive project, we must pick one machine
or the other but cannot pick both.
Machine A has an initial cost of $19,500 and a salvage value
of $7500 (today's value) at the end of its 12 year life.
Machine B has an initial cost of $17,900 and a salvage value
of $2300 (today's value) at the...
The city maintains a landfill that has been recorded during the current year within its parks....
The city maintains a landfill that has been recorded during the
current year within its parks. The landfill generated program
revenues of $4,000 in Year 4 and cash expenses of $15,000. It also
paid $3,000 cash for a piece of land. These transactions were
recorded as would have been anticipated, but no other recording was
made this year. The city assumes that it will have to pay $200,000
to clean up the landfill when it is closed in several years....
You are working on a bid for a contract. Thus far, you have determined that you...
You are working on a bid for a contract. Thus far, you have
determined that you will need $156,000 for fixed assets and another
$32,000 for net working capital at Time 0. You have also determined
that you can recover $68,400 after-tax for the combined fixed
assets and net working capital at the end of the 4-year project.
What must be the annual operating cash flow each year, if the IRR
of the project is 16 percent ?
Select one:...
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