One use of cash flow analysis is setting the bid price on a project. To calculate the bid price, we set the project NPV equal to zero and find the required price. Thus the bid price represents a financial break-even level for the project. Guthrie Enterprises needs someone to supply it with 230,000 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 $1,000,000 to install the equipment necessary to start production; youll depreciate this cost straight-line to zero over the projects life. Your fixed production costs will be $410,000 per year, and your variable production costs should be $8.50 per carton. You also need an initial investment in net operating working capital of $60,000. No additional operating working capital is needed and no operating working capital will be returned. If the tax rate is 35% and cost of capital is 14%, use goal seek to find the bid price to submit.