Problem 10-33 Calculating a Bid Price (L08)Komoka Enterprises needs someone to supply it with 155,000 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 $955,000 to install the equipment necessary tostart production. The equipment will be depreciated at 30% ( Class 10), and you estimate that it can be salvaged for $100,000 at theend of the five-year contract. Your fixed production costs will be $450,000 per year, and your variable production costs should be$16.60 per carton. You also need an initial net working capital of $105.000. If your tax rate is 35% and you require a 12 % return on yourInvestment, what bid price should you submit? (Do not round your intermediate calculations. Round the final answer to 2 decimalplaces. Omit $ sign in your response.)Bid price$per cartonD

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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