Setting a Bid Price:Company A needs to determine a bid price for a project it has received from Company B.Company B is looking for a Producer to supply it with 450,000 widgets each year for the next seven years.To undertake this project, company A will have to install new equipment at a cost of $510,000.This will be considered a Class 8 asset with a 20% CCA rate and is subject to Accelerated Investment Incentive rules.Company A expects to sell the equipment for $125,000 after 7 years.Annual productions costs are estimated as follows:variable costs per widget of $7.00 and fixed costs of $130,000 per year.Company A expects the new contract would lead to an immediate increase of $35,000 in NWC, which will be recovered at the end of the project. The firm has a 30% tax rate and it wants a 15% return.What bid price should it submit?

What is the correct value for Step #1?

What is the correct value for Step #2?

What is the correct value for Step #3?

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What is the correct value for Step #6?

Based on your answers to the first six questions, what is the appropriate course of action to follow?