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Consider a project to supply 112 million Pokemon trading cards per year for the next five year to the Pokemon-R-Us Corporations. You have some undeveloped

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Consider a project to supply 112 million Pokemon trading cards per year for the next five year to the Pokemon-R-Us Corporations. You have some undeveloped land available that cost $2,020,000 five years ago. If you sold the land today you would net $2,220,000 after taxes. You anticipate that the land can be sold in five years for $2,420,000 net of taxes. To supply the trading cards you will need to install $5.52 million in new plant and equipment. These fixed assets will be depreciated straight-line to zero over the project's five-year life. The plant and equipment will be sold for $620,000 before taxes at the end of five years. You anticipate an initial investment in net working capital of $720,000, and an additional $62,000 in each subsequent year. You estimate that all net working capital will be recovered at the end of the project. Your variable production costs are 0.62 cents per card (or $0.0062), and you have fixed costs of $1,450,000 per year. Your tax rate is 34 percent and your required return on this project is 12 percent. What is the lowest that your bid price per card should be? That is, what per-unit price gives the project an NPV = 0? Part A: Start by calculating the operating cash flow that, when received as an annuity for 5 years, would set the NPV = 0. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) OCF Part B: Now calculate the minimum bid price. (Do not round intermediate calculations and round your answer to 4 decimal places, e.g., 32.1616.) Bid price

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