Joseph Production Company is bidding a 10-year contract to provide the customer with 35,000 units of product per year. Their accounting department has estimated a labor and material costs of $38 per unit. An initial capital investment of $1,000,000 is required. The equipment belongs to CCA class 50. Initial net working capital of $65,000 is also needed, as are subsequent investments of $8,000 per year over the life of the contract. The firm must pay factory lease expenses of $63,000 per year. Equipment maintenance expenses are projected to be $40,000 per year. Both lease expenses and maintenance expenses are payable at the end of the year. At the end of the contract, the capital equipment can be sold for $60,000. The firm has a tax rate of 42% and a required return rate of 14%.

Required: Determine the before tax unit price Joseph should bid for this contract. Round the unit price to the nearest dollar. Show all calculations.

Attached image is almost the same problem as my question that you can use to solve. Sorry if it is too hard but my shitty professor always enjoys giving us hard time like this.

Kimono Ltd needs supplier to provide 151,000 cartons of machine screws per year for the next 5 years. Your company decides to bid on the contract. It will cost you $951,000 to install the equipment The equipment will be depreciated at 30% (Class 10), and you estimate that it can be salvaged for $96,000 at the end of the five-year. Your fixed production costs will be $446,000 per year, and your variable production costs should be $16.20 per carton You also need an initial net working capital of $101,000. If your tax rate is 35% and you require a 12% return on your investment, What bid price should you submit? Product units/year Variable Costs = Tax Rate = Discount Rate = 151,000 16.2 35% 12% Setting the Bid Price: Year 0 Fixed costs Variable costs (151,000 x $16.20) Total COGS 1 2 3 4 5 -446,000 -446,000 -446,000 -446,000 -446,000 -2,446,200 -2,446,200 -2,446,200 -2,446,200 -2,446,200 -2,892,200 -2,892,200 -2,892,200 -2,892,200 -2,892,200 (Cash Flow Calculation starts from here. Above figures are just to figure out the product costs) After Tax COGS -1,879,930 -1,879,930 -1,879,930 -1,879,930 -1,879,930 Initial Investment -951,000 Salvage 96,000 Net Working Capital -101,000 101,000 PV CCA Tax Shield 211,395 Total Cash Flows -840,605 -1,879,930 -1,879,930 -1,879,930 -1,879,930 -1,682,930 NPV of Total Cash Flow Mininum Revenue/Yr. Mininum Rev. / Carton Sales price before tax ($7,505,549) $2,082,112 (calculate per year revenue needed) $13.79 (calculate per carton price) $21.21 (calculate before tax per carton price) Kimono Ltd needs supplier to provide 151,000 cartons of machine screws per year for the next 5 years. Your company decides to bid on the contract. It will cost you $951,000 to install the equipment The equipment will be depreciated at 30% (Class 10), and you estimate that it can be salvaged for $96,000 at the end of the five-year. Your fixed production costs will be $446,000 per year, and your variable production costs should be $16.20 per carton You also need an initial net working capital of $101,000. If your tax rate is 35% and you require a 12% return on your investment, What bid price should you submit? Product units/year Variable Costs = Tax Rate = Discount Rate = 151,000 16.2 35% 12% Setting the Bid Price: Year 0 Fixed costs Variable costs (151,000 x $16.20) Total COGS 1 2 3 4 5 -446,000 -446,000 -446,000 -446,000 -446,000 -2,446,200 -2,446,200 -2,446,200 -2,446,200 -2,446,200 -2,892,200 -2,892,200 -2,892,200 -2,892,200 -2,892,200 (Cash Flow Calculation starts from here. Above figures are just to figure out the product costs) After Tax COGS -1,879,930 -1,879,930 -1,879,930 -1,879,930 -1,879,930 Initial Investment -951,000 Salvage 96,000 Net Working Capital -101,000 101,000 PV CCA Tax Shield 211,395 Total Cash Flows -840,605 -1,879,930 -1,879,930 -1,879,930 -1,879,930 -1,682,930 NPV of Total Cash Flow Mininum Revenue/Yr. Mininum Rev. / Carton Sales price before tax ($7,505,549) $2,082,112 (calculate per year revenue needed) $13.79 (calculate per carton price) $21.21 (calculate before tax per carton price)