Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Martin Enterprises needs someone to supply it with 160,000 cartons of machine screws per year to support its manufacturing needs over the next five years,

image text in transcribed Martin Enterprises needs someone to supply it with 160,000 cartons of machine screws per year to support its manufacturing needs over the next five years, and you've decided to bid on the contract. It will cost $2,150,000 to install the equipment necessary to start production; you'll depreciate this cost straight-line to zero over the project's life. You estimate that, in five years, this equipment can be salvaged for $170,000. Your fixed production costs will be $655,000 per year, and your variable production costs should be $9.11 per carton. You also need an initial investment in net working capital of $325,000. If your tax rate is 22 percent and you require a 12 percent return on your investment, what bid price per carton should you submit? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Sustainable Finance And Impact Investing

Authors: Alan S. Gutterman

1st Edition

1637423764, 978-1637423769

More Books

Students also viewed these Finance questions

Question

2. Ask several students to explain the directions.

Answered: 1 week ago

Question

an element of formality in the workplace between different levels;

Answered: 1 week ago