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You are working on a bid to build ten cabins a year for the next four years fo project requires the purchase of $215,000 of equipment which will be depre depreciation to a zero book value over four years. The equipment can be sc $149,001. You will also need $28,000 in net working capital for the life of the $22,000 a year and the variable costs will be $127,000 per cabin. Your requir project and your tax rate is 35%. What is the minimum amount, rounded to

You are working on a bid to build ten cabins a year for the next four years fo project requires the purchase of $215,000 of equipment which will be depre depreciation to a zero book value over four years. The equipment can be sc $149,001. You will also need $28,000 in net working capital for the life of the $22,000 a year and the variable costs will be $127,000 per cabin. Your requir project and your tax rate is 35%. What is the minimum amount, rounded to

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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You are working on a bid to build ten cabins a year for the next four years for a local campground. This project requires the purchase of $215,000 of equipment which will be depreciated using straight-line depreciation to a zero book value over four years. The equipment can be sold at the end of the project for $149,001. You will also need $28,000 in net working capital for the life of the project. Your fixed costs will be $22,000 a year and the variable costs will be $127,000 per cabin. Your required rate of return is 13% for this project and your tax rate is 35%. What is the minimum amount, rounded to the nearest $100, you should bid per cabin? O a $135,600 Ob. $137,800 c. $134,900 Od. $133,700 Oe. $138,200 4
Transcribed Image Text:You are working on a bid to build ten cabins a year for the next four years for a local campground. This project requires the purchase of $215,000 of equipment which will be depreciated using straight-line depreciation to a zero book value over four years. The equipment can be sold at the end of the project for $149,001. You will also need $28,000 in net working capital for the life of the project. Your fixed costs will be $22,000 a year and the variable costs will be $127,000 per cabin. Your required rate of return is 13% for this project and your tax rate is 35%. What is the minimum amount, rounded to the nearest $100, you should bid per cabin? O a $135,600 Ob. $137,800 c. $134,900 Od. $133,700 Oe. $138,200 4
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