The managers of PonchoParts, Inc. plan to manufacture engine blocks for classic cars from the 1960s era. They expect to sell 250 blocks annually for the next 5 years. The necessary foundry and machining equipment will cost a total of $800,000 and will be depreciated on a straight-line basis to zero over the projects life. The firm expects to be able to dispose of the manufacturing equipment for $150,000 at the end of the project. Labor and materials costs total $500 per engine block, fixed costs are $125,000 per year. Assume a 35% tax rate and a 12% discount rate.

3. What is the minimum bid price the firm should set as a sale price for the blocks if the firm were in a bidding situation?

a. $1,692

b. $1,927

c. $2,382

d. $2,564

Please show me step by step how to solve for sales in this equation: OCF = (Sales - Cost)*(1-T)+depreciation*T