Maintainit Inc. is asked to submit a bid for watering and spraying trees in a housing development

Question:

Maintainit Inc. is asked to submit a bid for watering and spraying trees in a housing development for the next five years. To provide this service, Maintainit would have to buy new equipment for $100,000 and invest $30,000 in working capital requirement. The equipment would be depreciated straight-line to zero salvage value over the five-year period. Total labor and other costs would be $80,000 a year. The tax rate is 40 percent and Maintainit's cost of capital is 10 percent.

What would Maintainit's minimum bid price need to be?

Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important... Cost Of Capital
Cost of capital refers to the opportunity cost of making a specific investment . Cost of capital (COC) is the rate of return that a firm must earn on its project investments to maintain its market value and attract funds. COC is the required rate of...