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Romo Enterprises needs someone to supply it with 114,000 cartons of machine screws per year to support its manufacturing needs over the next five years, and youve decided to bid on the contract. It will cost you $810,000 to install the equipment necessary to start production, youll depreciate this cost straigh line to zero over the projects life. You estimate that, in five years, this equipment can be salvaged for $64,000 Your fixed production costs will be $319,000 per year, and your variable production costs should be $9.70 per carton. You also need an initial investment in net working capital of percent and you require a return of 11 percent on your investment, what bid price should you submit? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) $69,000. If your tax rate is 30 Bid price ReferenceseBook & Resources Learning Objective: 10-03 How to set a bid price for a project Worksheet Section 10 6 Some Special Cases of Discounted Cash Flow Analysi Difficulty: Basic
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Home nert Page Layout Formulas Data Review View dd-Ins E AutoSum as Cut Wrap Text General Sort &Find & Copy Formatting, as Table w styles. Styles 2 ClearFe Select Edting ▼ в 1 프 . Ej-., Δ. : rーー 逻锂函Merge & Center. $, % , 弼,8 Conditional Format eCell Insert Delete Format ▼ ㆆ Paste Format Painter Cells Number Font Alignment Clipboard 0419 Is IT IU IV IW IO IP IQ IR IM IN 406 407 408 409 410 411 412 413 414 415 416 417 418 419 420 421 422 423 424 4external rate MIRR NPV IRR REPLACEMENT S HPR GMAM EAC MACRS BID PRICE AT NPV -0 units (sp-vc)-fc-depreciation)( 1-t) + depreciation] x PVI FA @ 12% 5 YEARS + (RECOVERY OF WORKING CAPITAL + AFTER TAX SALVAGE VALUE) X PVIF @12% 5 YEARS = COST OF EQUIPMENT +WORKING CAPITAL [114000 (X-9.70)-319000-1620001*0.70 + 1 62000 JX PVI FA @ 1196 5 YEARS + (69000 +64000(1-0.30)) X PVIF @ 11%, 5 YEARS-810000 + 69000 [114000 (X-9.70)-319000-162000]*0.70 162000] X 3.6959(69000 +64000 (1-0.30) X0.5935 81000069000 114000 (X-9.70) -319000-162000] F0.70162000 J X 3.695967540.3- 879000 [[114000 (x) 1105800 -319000-162000]*0.70162000] X 3.695967540.3-879000 179800 (X) 1110760+162000 X 3.6959 67540.3- 879000 294932.82(X) 3506522.084+67540.3 879000 294932.82(X)- 3506522.084 67540.3 + 879000 X-14.64056 ANSWER : BID PRICE 14.64 RATİOCASHBUDGET WaCC BOND EPS EBIT 1 REPLACEMENT STats Np. BETA LEVERED 130% rences: ED12 02:22

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