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There is a tender to supply 60.000.000 waterproof stickers to the International Delivery Services for the next 5 years. You will need to spend $3,000,000
There is a tender to supply 60.000.000 waterproof stickers to the International Delivery Services for the next 5 years. You will need to spend $3,000,000 in new manufacturing plant and equipment to actually produce the stickers: this plant and equipment will be depreciated straight-line to zero over the project's 5-year life. The equipment can be sold for $456,000 at the end of the project. You will also need $560,000 in initial networking capital for the project, which will be recovered by the end of the project. Your production costs are 3.8 cents per sticker ($1 = 100 cents), and you have fixed costs of $800.000 per year. Your tax rate is 30% and your required return on this project is 11%. What bid price per sticker should you submit
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