Consider a project to supply 100 million postage stamps per

Assignment Help Accounting Basics

Reference no: EM13394827

Consider a project to supply 100 million postage stamps per year to canada post for the next 5 years. You have an idle parcel of land available that cost $1,000,000 five years ago; if you sold the land today, it would net you $1,500,000 after tax. If you sold the land five years from now, the land can be sold again for $1,500,000 after tax. You will need to install $3,800,000 in new manufacturing plant and equip to actually produce stamps; this plant and equipment will be depreciated straight-line to zero over the project's five year life. The equipment can be sold for $680,000 at the end of the project. You will need $500,000 in initial net working capital for the project and an additional $50,000 every year thereafter. Your production costs are $0.5 cents per stamp, and you have fixed costs of $900,00 per year. If he tax rate is 34 percent and your required return on the project is 12 percent, what bid price should you submit on the contract?

Reference no: EM13394827

Questions Cloud

Explain how does having a scope and wbs help project teams : 1. how does having a scope and wbs help project teams during project execution? why is it difficult to develop good

Positive tronics industries preferred stock has a par value : 1.positive tronics industries preferred stock has a par value of 100 and pays a dividend of 6.00 per share. it

In calculating wacc for the cost of debt use the current : in calculating wacc for the cost of debt use the current cost of debt with the assumption that there is no need to

Write a paper on a company of your choice and discuss the : write a paper on a company of your choice and discuss the market segmentation within that industry along with the

Consider a project to supply 100 million postage stamps per : consider a project to supply 100 million postage stamps per year to canada post for the next 5 years. you have an idle

In brief define what social responsibility is and what it : you manage a processing plant which produces a toxic waste. disposing of this waste is costly and since the volume of

An important feature of a job order cost system is that : an important feature of a job order cost system is that each job must be completed before a new job is

Explain what would be the capacity of the doughnut : you are considering opening a small doughnut shop in your hometown. research the process required to make doughnuts.

What is the business ethics for the tobacco industrynbsp : 1.create a marketing mix as it pertains to tobacco industry 5 ps?2.how does the tobacco industry change its marketing

User Account

All Pages