Your company is bidding on a contract to supply $150,000$ earphones per year for $5$ years. Fixed costs of production will be $$500,000$ per year and variable costs will be $$8\mathrm{.}25$ per unit.

It costs $$2,600,000$ to purchase the necessary machines. The machines will be depreciated linearly to zero over $5$ years and will not have any value after that time.

The project requires an investment of $$30,000$ for net working capital initially, which can be recouped at the end of the project.

The marginal tax rate is $35\%$ and the required return is $8\%$ a$.$ What is minimum level for the present value of operating cash flows $($EBIT $(1-$t$)+$ Dep.$)$ for the project to break even? b$.$At what level of annual operating cash flow $($EBIT $(1-$t$)+$ Dep.$)$ does the project break even? c$.$ What is the annual depreciation $($in $$)?$ d$.$ What is the minimum bid price for the contract $($in $ per unit$)?$