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Business, 19.03.2021 02:00 bertha4082

uthrie Enterprises needs someone to supply it with 145,000 cartons of machine screws per year to support its manufacturing needs over the next five years, and you’ve decided to bidon the contract. It will cost $2.1 million to install the equipment necessary to start production; you will depreciate this cost straight-line to zero over the project’s life. You estimate that in five years this equipment can be salvaged for $150,000. Your fixed production costs will be$650,000 per year, and your variable production costs should be $94.5 per carton. You also need an initial investment in net working capital of $325,000. If your tax rate is 21% and you require an 11% return on your investment, what bid price should you submit?

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