When determining a minimum bid price you should assume the M

When determining a minimum bid price, you should assume the

Multiple Choice

a. net present value is zero.

b. discount rate equals the risk-free rate.

c. fixed assets are unaffected.

d. depreciation is based on the straight-line method.

e. net profit is zero.

Solution

The bid price is defined as the minimum price you should charge if you want to earn a target return on investment.

and if we discount all cashflows at target return on investment, the net present value will be zero

so correct answer : a : net present value is zero

no other option is anyway connected with bid price.