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Sam's Enterprises needs someone to supply it with 9 0 , 0 0 0 cartons of machine screws per year to support its manufacturing needs
Sam's Enterprises needs someone to supply it with 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 you to install the equipment necessary to start production. The equipment will be depreciated at $ per year, and you estimate that it can be salvaged for $ at the end of the fiveyear contract. Your fixed production costs will be $ annually, and your variable production costs should be $ per carton. You also need an initial net working capital of $ If your tax rate is and you require a return on your investment, what bid price should you submit?
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