To calculate the bid price, we set the project NPV equal to zero

and find the required price. Thus the bid price represents a financial break$-$even level for the project. Guthrie Enterprises needs someone to supply it with $140,000$ cartons of machine screws per year to support its manufacturing needs over the next five years, and you've decided to bid on the contract. It will cost you $$1,800,000$ to install the equipment necessary to start production; you'll depreciate this cost straight$-$line to zero over the project's life. You estimate that in five years this equipment can be salvaged for $$150,000.$ Your fixed production costs will be $$265,000$ per year, and your variable production costs should be $$8\mathrm{.}50$ per carton. You also need an initial investment in net working capital of $$130,000.$ If your tax rate is $35$ percent and you require a $14$ percent return on your investment, what bid price should you submit? Step $1-$ Determine annual after$-$tax cash flow that generates the appropriate return Step $2-$ After you calculate the required annual after$-$tax cash flow in Step $1,$ you can write out the formula for each year$$s after$-$tax cash flow $($including price per carton$),$ make this equal to the annual cash flow calculated in Step $1$ and solve for price per carton