Guthrie Enterprises needs someone to supply it with 145,000 cartons of machine screws per year to support its manufacturing needs over the next five years, and youve decided to bid on the contract. It will cost you $1,850,000 to install the equipment necessary to start production; youll depreciate this cost straight-line to zero over the projects life. You estimate that in five years this equipment can be salvaged for $155,000. Your fixed production costs will be $270,000 per year, and your variable production costs should be $9.00 per carton. You also need an initial investment in net working capital of $135,000. The tax rate is 34 percent and you require a return of 11 percent on your investment. Assume that the price per carton is $16.50.

1) Calculate the project NPV

2) What is the minimum number of cartons per year that can be supplied and still break even?

3) What is the highest fixed costs that could be incurred and still break even?