The bid price always assumes which one of the following?
A) A project has a one-year life.
B) The aftertax net income of the project is zero.
C) The net present value of the project is zero.
D) Any assets purchased will have a positive salvage value at the end of the project.
E) Assets will be depreciated based on MACRS.

Question

Quizplus · Accepted Answer

The bid price assumes that the net present value (NPV) of the project is zero. This means that the expected present value of future cash inflows equals the expected present value of future cash outflows, resulting in no profit or loss. The bid price is calculated based on this assumption, and any deviation from this assumption will affect the bid price. Therefore, option C is the correct choice.

The Bid Price Always Assumes Which One of the Following