Your company has been approached to bid on a contract to sell 18,000 voice recognition

(VR) computer keyboards per year for four years. Due to technological improvements,

beyond that time they will be outdated and no sales will be possible. The equipment

necessary for the production will cost $3.6 million and will be depreciated on a straight

line basis to a zero salvage value. Production will require an investment in net working

capital of $125,000 to be returned at the end of the project, and the equipment can be

sold for $250,000 at the end of production. Fixed costs are $775,000 per year and

variable costs are $43 per unit. In addition to the contract, you feel your company can

sell 4,000, 12,000, 14,000, and 7,000 additional units to companies in other countries

over the next four years, respectively, at a price of $135. This price is fixed. The tax rate

is 24 percent, and the required return is 13 percent. Additionally, the president of the

company will undertake the project only if it has an NPV of $100,000. What bid price

should you set for the contract?