Bid price is where NPV=0
We see that
NPV=-830000-75000+60000*(1-35%)/1.14^5+75000/1.14^5+((Q*(P-8.50)-f-830000/5)*(1-35%)+830000/5)/14%*(1-1/1.14^5)
1.
NPV=-830000-75000+60000*(1-35%)/1.14^5+75000/1.14^5+((130000*(14-8.50)-210000-830000/5)*(1-35%)+830000/5)/14%*(1-1/1.14^5)=480578.8601
As NPV is positive, bid price will be less than 14
For bid price: NPV=0
Hence,
-830000-75000+60000*(1-35%)/1.14^5+75000/1.14^5+((130000*(P-8.50)-210000-830000/5)*(1-35%)+830000/5)/14%*(1-1/1.14^5)=0
=>P=12.34
Number of cartons needed will be less than 130000
Level of fixed costs will be more than 210000
2.
Breakeven where NPV=0
-830000-75000+60000*(1-35%)/1.14^5+75000/1.14^5+((Q*(14-8.50)-210000-830000/5)*(1-35%)+830000/5)/14%*(1-1/1.14^5)=0
=>Q=90843.44
3.
Breakeven where NPV=0
-830000-75000+60000*(1-35%)/1.14^5+75000/1.14^5+((130000*(14-8.50)-f-830000/5)*(1-35%)+830000/5)/14%*(1-1/1.14^5)=0
=>f=425361.10
Could you please answer for the question 31 Thanks! 30. Calculating a Bid Price Another utilization of cash flow...
Another utilization of cash flow analysis is setting the bid price on a project. To calculate the bid price, we set the project NPV equal to zero and find the required price. Thus the bid price represents a financial break-even level for the project. Guthrie Enterprises needs someone to supply it with 149,000 cartons of machine screws per year to support its manufacturing needs over the next five years, and you've decided to bid on the contract. It will cost...
The technique for calculating a bid price can be extended to many other types of problems. Answer the following questions using the same technique as setting a bid price; that is, set the project NPV to zero and solve for the variable in question. Guthrie Enterprises needs someone to supply it with 150,000 cartons of machine screws per year to support its manufacturing needs over the next five years, and you've decided to bid on the contract. It will cost...
The technique for calculating a bid price can be extended to many other types of problems. Answer the following questions using the same technique as setting a bid price; that is, set the project NPV to zero and solve for the variable in question. Guthrie Enterprises needs someone to supply it with 145,000 cartons of machine screws per year to support its manufacturing needs over the next five years, and you’ve decided to bid on the contract. It will cost...
The technique for calculating a bid price can be extended to many other types of problems. Answer the following questions using the same technique as setting a bid price; that is, set the project NPV to zero and solve for the variable in question. Guthrie Enterprises needs someone to supply it with 154,000 cartons of machine screws per year to support its manufacturing needs over the next five years, and you’ve decided to bid on the contract. It will cost...
The technique for calculating a bid price can be extended to many other types of problems. Answer the following questions using the same technique as setting a bid price; that is, set the project NPV to zero and solve for the variable in question. Guthrie Enterprises needs someone to supply it with 150,000 cartons of machine screws per year to support its manufacturing needs over the next five years, and you’ve decided to bid on the contract. It will cost...
To solve the bid price problem presented in the text, we set the project NPV equal to zero and found the required price using the definition of OCF. Thus the bid price represents a financial break-even level for the project. This type of analysis can be extended to many other types of problems. Martin Enterprises needs someone to supply it with 140,000 cartons of machine screws per year to support its manufacturing needs over the next five years, and you’ve...
To solve the bid price problem presented in the text, we set the project NPV equal to zero and found the required price using the definition of OCF. Thus the bid price represents a financial break-even level for the project. This type of analysis can be extended to many other types of problems. Martin Enterprises needs someone to supply it with 130,000 cartons of machine screws per year to support its manufacturing needs over the next five years, and you've...
To solve the bid price problem presented in the text, we set the project NPV equal to zero and found the required price using the definition of OCF. Thus the bid price represents a financial break-even level for the project. This type of analysis can be extended to many other types of problems. Martin Enterprises needs someone to supply it with 126,000 cartons of machine screws per year to support its manufacturing needs over the next five years, and you've...
To solve the bid price problem presented in the text, we set the project NPV equal to zero and found the required price using the definition of OCF. Thus the bid price represents a financial break-even level for the project. This type of analysis can be extended to many other types of problems. Martin Enterprises needs someone to supply it with 134,000 cartons of machine screws per year to support its manufacturing needs over the next five years, and you’ve...
To solve the bid price problem presented in the text, we set the project NPV equal to zero and found the required price using the definition of OCF. Thus the bid price represents a financial break-even level for the project. This type of analysis can be extended to many other types of problems. Martin Enterprises needs someone to supply it with 126,000 cartons of machine screws per year to support its manufacturing needs over the next five years, and you've...