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The technique for calculating a bid price can be extended to many other types of problems. Answer the following questions using the same technique as
The technique for calculating a bid price can be extended to many other types of problems. Answer the following questions using the same technique as setting a bid price; that is, set the project NOV to zero and solve for the variable in question. Martin Enterprises needs someone to supply it with 252000 cartons of machine screws per year to support its manufacturing needs over five years, and you've decided to bid on the contract. It will cost $1920000 to install the equipment necessary to start production; you'll depreciate the cost straight line to zero over the projects life. Your fixed production cost will be $277000 per year and your visits Le production cost should be $10.60 per carton. You will also need an initial investment in net working capital of $142000. The tax rate is 22 percent and you require a return of 12 percent in your investment. Assume that the price per carton is $17.20. What is the NPV? What is the minimum carton? What is the highest fixed cost
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