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Pls help me solve this question thanks, and stop asking me for extra money to solve the question. Consider a project to supply 100 million
Pls help me solve this question thanks, and stop asking me for extra money to solve the question.
Consider a project to supply 100 million postage stamps per year to the U.S. Postal Service for the next five years. You have an idle parcel of land available that cost $750,000 five years ago; if the land were sold today, it would net you $1.1 million aftertax. The land can be sold for $1.3 million after taxes in five years. You will need to install $5.4 million in new manufacturing plant and equipment to actually produce the stamps; this plant and equipment will be depreciated straight-line to zero over the project's five-year life. The equipment can be sold for $575,000 at the end of the project. You will also need $450,000 in initial net working capital for the project, and an additional investment of $40,000 in every year thereafter. Your production costs are .29 cents per stamp, and you have fixed costs of $1.1 million per year. If your tax rate is 23 percent and your required return on this project is 10 percent, what bid price should you submit on the contract? (Do not round intermediate calculations and round your answer to 5 decimal places, e.g., 32.16161.) Bid priceStep by Step Solution
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