Reference no: EM132943585

Problem 1: Your financial advisor based on the market research advised you that the variable cost for each building is likely to exceed 1,640,000 used to compute the bid in the appartment building question question. The advisor suggested that you bid $2.5million for each building. This bid will make the project NPV positive even under the increased variable cost. The advisor, however, does not provide an estimate of the increased variable cost. If you bid the suggested amount of $2.5million for each building, what is the maximum variable cost per building that allows you to bid for the project (i.e project NPV=0). Assume that other than the variable cost and the new bid of $2.5million, all other information from the appartment building question are valid.

Multiple Choice

Option 1: $2,543,241

Option 2: $2,316,741

Option 3: $2,074,287

Option 4: $3,074,287