Komoka Enterprises needs someone to supply it with 151.000 cartons of machine screws per year to support its manufacturing needs over the next five years, and you've decided to bid on the contract. It will cost you $951,000 to install the equipment necessary to start production. The equipment will be depreciated at 30% (Class 10), and you estimate that it can be salvaged for $96.000 at the end of the five-year contract. Your fixed production costs will be $446,000 per year, and your variable production costs should be $16.20 per carton. You also need an initial net working capital of $101.000 If your tax rate is 35% and you require a 12% return on your investment what bid price should you submit? (Do not round your intermediate calculations. Round the final answer to 2 decimal places. Omit S sign in your response.) Bid price per carton

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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Problem 10-33 Calculating a Bid Price (L08)
Komoka Enterprises needs someone to supply it with 151,000 cartons of machine screws per year to support its manufacturing needs
over the next five years, and you've decided to bid on the contract. It will cost you $951,000 to install the equipment necessary to start
production. The equipment will be depreciated at 30% (Class 10), and you estimate that it can be salvaged for $96.000 at the end of
the five-year contract. Your fixed production costs will be $446,000 per year, and your variable production costs should be $16.20 per
carton. You also need an initial net working capital of $101.000 If your tax rate is 35% and you require o 12% return on your investment
what bid price should you submit? (Do not round your intermediate calculations. Round the final answer to 2 decimal places. Omit
S sign in your response.)
Bid price
per carton
Transcribed Image Text:Problem 10-33 Calculating a Bid Price (L08) Komoka Enterprises needs someone to supply it with 151,000 cartons of machine screws per year to support its manufacturing needs over the next five years, and you've decided to bid on the contract. It will cost you $951,000 to install the equipment necessary to start production. The equipment will be depreciated at 30% (Class 10), and you estimate that it can be salvaged for $96.000 at the end of the five-year contract. Your fixed production costs will be $446,000 per year, and your variable production costs should be $16.20 per carton. You also need an initial net working capital of $101.000 If your tax rate is 35% and you require o 12% return on your investment what bid price should you submit? (Do not round your intermediate calculations. Round the final answer to 2 decimal places. Omit S sign in your response.) Bid price per carton
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