Bid Price Blue Operations plc needs someone to supply it with 150,000 cartons of machine screws per year to support its manufacturing needs over the next 5 years, and you’ve decided to bid on the contract. It will cost you

£780,000 to install the equipment necessary to start production; you’ll depreciate this cost using 18 per cent reducing balances over the project’s life. You estimate that in 5 years this equipment can be salvaged for

£50,000. Your fixed production costs will be £240,000 per year, and your variable production costs should be £8.50 per carton. You also need an initial investment in net working capital of £75,000. If your tax rate is 23 per cent and you require a 16 per cent return on your investment, what bid price should you submit?