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 needsover 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 startproduction. The equipment will be depreciated at 30% (Class 10), and you estimate that it can be salvaged for $96.000 at the end ofthe five-year contract. Your fixed production costs will be $446,000 per year, and your variable production costs should be $16.20 percarton. 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 investmentwhat bid price should you submit? (Do not round your intermediate calculations. Round the final answer to 2 decimal places. OmitS sign in your response.)Bid priceper carton

The various types of assets are classified under various asset classes for capital consumption…

Answered: Komoka Enterprises needs someone to…

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

Section: Chapter Questions

Problem 1PS

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JDAR Enterprises needs someone to supply it with 156000 cartons of machine screws per year to support its manufacturing needs over the next 4years, and you've decided to bid on the contract. It will cost you $1750000 to install the equipment necessary to start production; you'll depreciate this cost straight-line to zero over the project's life. You estimate that in five years this equipment can be salvaged for $220000. Your fixed production costs will be $281,000 per year, and your variable production costs should be $9 per carton. You also need an initial investment in net working capital of $146,000. If your tax rate is 0.32 percent and you require a return of 0.16 percent on your investment, what bid price per carton should you submit What is the initial investment 1896000 what is the terminal value? (hint, discounted) 163257.76 what is the discounted cash flow 4564795.86 what is the bid price 4.73 Finish review A
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None

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