1. Your firm is bidding on a contract to supply 5,000 units of a component per year for five (5) years. To meet this requirement, your firm would need to install new equipment at a capita- lized cost of $2.0 million, depreciated straight-line to zero over the five year life. The addi- tional fixed costs would be $100,000 p.a., and the residual value would be $20,000 pre-tax. The cost of funds is 12%. The tax rate is 20%. The firm's cost accountants estimate that the variable cost of each unit is $1.25. They also anticipate that working capital will increase by $25,000 from its present level for the five-year duration of the project. bluow major bay be