In setting the bid price, the ﬁrm seeks the price that will cause the project to "breakeven" in a ﬁnancial sense. The lowest acceptable bid price results in all of the following EXCEPT:

Question

Quizplus · Accepted Answer

The lowest acceptable bid price results in the NPV being zero, the IRR equaling the required return, the PI being 1, and the discounted payback period equaling the project's life. However, the AAR (Average Accounting Return) is not necessarily equal to the required return in this scenario.

In Setting the Bid Price, the ﬁRm Seeks the Price