You are working on a bid to build two apartment buildings a year for the next 5 years for a local college

You are 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 of $750,000 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 $325,000. You will also need $140,000 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 percent. What is the minimal amount, rounded to the nearest $100, you should bid per building?    A.  $1,423,700 B.  $1,489,500 C.  $1,733,000 D.  $2,780,600 E.  $3,465,900   NI = $209,750.30 - ($750,000/5) = $59,750.30 EBT = $59,750.30/(1 - 0.35) = $91,923.54 Sales = $91,923.54 + ($750,000/5) + $628,000 + ($1,298,000 × 2) = $3,465,923.54 Bid per building = $3,465,923.54/2 = $1,732,961.77 When rounded to the nearest $100, the bid price is $1,733,000

77.

Automated Manufacturers uses high-tech equipment to produce specialized aluminum products for its customers. Each one of these machines costs $1,480,000 to purchase plus an additional $52,000 a year to operate. The machines have a 6-year life after which they are worthless. What is the equivalent annual cost of one these machines if the required return is 16 percent?    A.  -$453,657 B.  -$427,109 C.  -$301,586 D.  -$295,667 E.  -$256,947