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Problem 8 - 3 7 Calculating a Bid Price Guthrie Enterprises needs someone to supply it with 1 5 9 , 0 0 0 cartons
Problem Calculating a Bid Price
Guthrie Enterprises needs someone to supply it with 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 $ to install the equipment necessary to start production; youll depreciate this cost straightline to zero over the projects life. You estimate that in five years, this equipment can be salvaged for $ Your fixed production costs will be $ per year, and your variable production costs should be $ per carton. You also need an initial investment in net working capital of $ If your tax rate is percent and you require a return of percent on your investment, what bid price per carton should you submit? Do not round intermediate calculations and round your answer to decimal places, eg
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