Question
Apple is going to bid on supplying KSU Coles College with 2,000 Apple watches a year for four years. They will need to purchase another
Apple is going to bid on supplying KSU Coles College with 2,000 Apple watches a year for four years. They will need to purchase another distribution center for $35,000 that has a life of four years. It will be fully depreciated to zero salvage value after the four years using straight-line depreciation. Apple will have to set aside an additional $5,800 in inventory cost to fund this project. Each Apple watch will cost $130 to make. The relevant cost of capital is 7% and the marginal tax rate 30%. There are twelve other companies bidding for this contract. What bid price should Apple make per each Apple watch?
Question 26 options:
| A) $245.60 |
| B) $150 |
| C) $1,500 |
| D) $1,358 |
| E) $135.80 |
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