Initial investment in net working capital

Assignment Help Financial Management

Reference no: EM131890393

Romo Enterprises needs someone to supply it with 112,000 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 $790,000 to install the equipment necessary to start production; you’ll depreciate this cost straight-line to zero over the project’s life. You estimate that, in five years, this equipment can be salvaged for $62,000. Your fixed production costs will be $317,000 per year, and your variable production costs should be $9.50 per carton. You also need an initial investment in net working capital of $67,000. If your tax rate is 35 percent and you require a return of 12 percent on your investment, what bid price should you submit?

Reference no: EM131890393

Questions Cloud

Price of bonds based on semiannual analysis : Compute the price of the bonds based on semiannual analysis. Compute the yield to maturity.

Capsule in evasion of the immune response : What is the role of the bacterial capsule in evasion of the immune response?

Explain the difference between between adaptation : Explain the difference between between adaptation, natural selection, and evolution.

Write a paper discussing the article and its relevance : Find a current article about UNIX Networking. Write a 525-word paper discussing the article and its relevance to the course.

Initial investment in net working capital : You also need an initial investment in net working capital of $67,000. If your tax rate is 35 percent and you require a return of 12 percent on your investment,

Example of a genetically modified organism : This may be a plant or an animal and may currently be on the market, was on the market in the past, or is under development.

Write a paper describing advantages of freebsd over windows : Write 3 page word document describing the Advantages of FreeBSD over Windows. The paper should be APA format.

When deciding whether to invest in new manufacturing plant : Which of the following should be treated as incremental cash flows when deciding whether to invest in a new manufacturing plant?

Compare the structure of carbon dioxide and glucose : Compare the structure of carbon dioxide and glucose. What is present in the glucose molecule that is missing in the carbon dioxide molecule?

User Account

All Pages