Your company is bidding on a contract to supply 150,000 earphones per year for 4 years. Fixed costs of production will be $500,000 per year and variable costs will be $8.25 per unit. It costs $2,600,000 to purchase the necessary machines. The machines will be depreciated linearly to zero over 4 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 11%.

1. What is minimum level for the present value of operating cash flows (EBIT (1-t) + Dep.) for the project to break even?
2. At what level of annual operating cash flow (EBIT (1-t) + Dep.) does the project break even?
3. What is the annual depreciation (in $)?
4. What is the minimum bid price for the contract (in $ per unit)?