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You will bid to supply three jets per year for each of the next 3 years to a Canadian commercial carrier. To get set up,
You will bid to supply three jets per year for each of the next 3 years to a Canadian commercial carrier. To get set up, you will need $10 million in equipment, to be depreciated straight-line to zero over 3 years, with no salvage value. Total fixed costs per year are $5 million, and variable costs are $7 million per jet. Assuming a tax rate of 30% and a required return of 10%, what is the minimum price you should offer to supply the jets
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