Which one of the following statements is correct concerning bid prices?
A) The competitor who wins the bid is the one who submits the highest bid price.
B) The winning bid may be at a price that is below break-even especially if there is a related aftermarket for the product.
C) A bid price is computed based on 110% of a firm's normal required return.
D) A bid price should be computed based solely on the operating cash flows of the proposed project.
E) A bid price should be computed based on a zero% required rate of return.
Correct Answer:
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