Question
The BB Computer Company has been requested by a large brokerage firm to submit a bid for a new computer system. The system would be
The BB Computer Company has been requested by a large brokerage firm to submit a bid for a new computer system. The system would be installed in 20 branch offices per year for the next three years. BB would need to purchase $220,000 worth of specialized equipment. The CCA rate would be 30 percent, on a declining balance basis. BB will be able to sell the equipment in 4 years for $150,000. Labour and material costs would be $50,000 per site. The company would need to invest $100,000 in net working capital. The relevant tax rate is 45 percent. Assume the asset class remains open after the asset is sold. If BB requires a 15% return on investment, their minimum bid (price per system) should be
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