Determining appropriate bid price

Reference no: EM1371328

Guthrie Enterprises needs someone to supply it with 230,000 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 you $1,000,000 to install the equipment necessary to start production; you'll depreciate this cost straight-line to zero over the project's life. Your fixed production costs will be $410,000 per year, and your variable production costs should be $8.50 per carton. You also need an initial investment in net working capital of $60,000. No additional working capital is needed and no working capital will be returned. If your tax rate is 35% and you require a 14% return on your investment, what bid price should you submit?

Reference no: EM1371328

Questions Cloud

Intermediate products : What factors would cause a firm to decide to buy intermediate products needed for production of its final goods or services?

Explain changing a promotion system : Explain Changing a Promotion System and response the questions that fall after the case description

How fast do two coasts after they couple : If a third charge, of 5, is now placed at the point = 3.00, = 4.00 find the components of the total force exerted on this charge by other two charges.

Illustrate what is his reservation wage : Assume he takes welfare and does not work. Illustrate what is his reservation wage. He will not lose his welfare if he works.4. Suppose he is working and receives no welfare.

Determining appropriate bid price : Guthrie Enterprises needs someone to supply it with 230,000 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.

How a large amount work to eject a positive sodium ion : An oscillator with a mass of 530 g and a period of .80 s has amplitude that decreases by 2 percent during each complete oscillation. At what time will the energy be reduced to 33 percent of its initial value.

Illustrate what price must each tradable permit : Quantify cost savings associated with a cost-effective abatement allocation that could be achieved through trading. Illustrate what price must each tradable permit be set to achieve cost-effective solution.

Break-even analysis-profitability impact : Research the economic costs involved in the conducting break-even analysis for good or service of your choice. Assess the factors involved in conducting the break-even analysis. Find out the conditions which might exist for the manager of this goo..

How far behind is second one : Tim and Rick both can run at speed v_r and walk at speed v_w, with v_{rm r} > v_{rm w}. They set off together on a journey of distance D. Rick walks half of the distance and runs the other half. Tim walks half of the time and runs other half.

User Account

All Pages