Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

We have been requested by a large retailer to submit a bid for a new point - of - sale credit checking system. The system

We have been requested by a large retailer to submit a bid for a new point-of-sale credit checking system. The system would be installed, by us, in 89 stores per year for three years. We would need to purchase $1,300,000 worth of specialized equipment. This will be depreciated at a 20% CCA rate. We will sell it in three years, at which time it will be worth about half of what we paid for it. Labour and material cost to install the system is about $96,000 per site. Finally, we need to invest $340,000 in working capital items. The relevant tax rate is 36%. What price per system should we bid if we require a 20% return on our investment? (Do not round intermediate calculations. Round the final answer to 2 decimal places. Omit $ sign in your response.)
Bid price $
per system

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Capital Markets Institutions And Instruments

Authors: Frank J. Fabozzi, Franco Modigliani

4th Edition

0136026028, 9780136026020

More Books

Students also viewed these Finance questions