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18. Calculating a Bid Price [LO3] Dahlia Enterprises needs someone to supply it with 120,000 cartons of machine screws per year to support ifs manufacturing
18. Calculating a Bid Price [LO3] Dahlia Enterprises needs someone to supply it with 120,000 cartons of machine screws per year to support ifs manufacturing needs over the next five years, and you've decided to bid on the contract. It will cost you $870,000 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 fi ve years, this equipment can be salvaged for $70,000. Your fixed production costs will be $325,000 per year, and your variable production costs should be $10.30 per carton. You also need an initial investment in net working capital of $75,000. If your tox rate is 35 percent and you require a 12 percent return on your investment, what (we will be focusing on 16,17 and 18 for this tutorial; you may attempt the rest and verify your answers with me)
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