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Martin Enterprises needs someone to supply it with 1 2 9 , 0 0 0 cartons of machine screws per year to support its manufacturing

Martin Enterprises needs someone to supply it with 129,000 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 $930,000 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 could be worth $97,000(before taxes). Your fixed production
costs will be $505,000 per year, and your variable production costs should be $17.75 per
carton. You also need an initial investment in net working capital of $98,000. Assume your tax
rate is 24 percent and you require a return (discounting rate) of 10 percent on your investment

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