Plant-equipment will be depreciated straight-line to zero

Assignment Help Financial Management
Reference no: EM131053084

Consider a project to supply 110 million postage stamps per year to the U.S. Postal Service for the next five years. You have an idle parcel of land available that cost $2,000,000 five years ago; if the land were sold today, it would net you $2,200,000 aftertax. The land can be sold for $2,400,000 after taxes in five years. You will need to install $5.5 million in new manufacturing plant and equipment to actually produce the 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 $600,000 at the end of the project. You will also need $700,000 in initial net working capital for the project, and an additional investment of $60,000 in every year thereafter. Your production costs are .60 cents per stamp, and you have fixed costs of $970,000 per year. If your tax rate is 35 percent and your required return on this project is 11 percent, what bid price should you submit on the contract? (Do not round intermediate calculations and round your answer to 5 decimal places, e.g., 32.16161.) Bid price $ ?

Reference no: EM131053084

Questions Cloud

Both machines will be depreciated on straight-line basis : Vandelay Industries is considering the purchase of a new machine for the production of latex. Machine A costs $3,150,000 and will last for six years. Variable costs are 35 percent of sales, and fixed costs are $285,000 per year. Machine B costs $5,38..
Large public audience of mostly adults : What are some techniques she uses to make her point persuasive? What skills would you need to develop if you were to deliver a speech to a large public audience of mostly adults?
Including red envelope and eddie bauer : A number of major retailers have been driven into bankruptcy protection during this recession, including Red Envelope and Eddie Bauer, or gone out of business altogether, like Circuit City.
Context of the seventeenth century : Professor Steven B. Smith suggests that Hobbes "carried out what Machiavelli had hoped to make possible." Hobbes made Machiavelli "habitable." Do you agree that Hobbes' state is "habitable" within the context of the seventeenth century?
Plant-equipment will be depreciated straight-line to zero : Consider a project to supply 110 million postage stamps per year to the U.S. Postal Service for the next five years. You have an idle parcel of land available that cost $2,000,000 five years ago; if the land were sold today, it would net you $2,200,0..
Project - skywrench hangar relocation project : SkyWrench Hangar Relocation - Equipment and inventory updates and you are encouraged to use any of the tools available in course.
Feedback and evaluation : In 3-4 complete sentences, offer feedback on how they can better use electronics in their lives. Be sure to let them know that it is okay to spend some time playing video games, texting, or checking social media, but your feedback and evaluation m..
Evaluate how the criteria related to security and privacy : Analyze the components of this scenario to determine the liability for each of the partners engaged in this health information exchange agreement.
Why does john cage consider : Why does John Cage consider 4'33" music when the performer does not play for the entire time span?

Reviews

Write a Review

Financial Management Questions & Answers

  Foreign company acquisition

Acquisition by a foreign company and the effects of that decision and the results of foreign exchange in Euro and the exchange rate differences.

  Financial management for profit and non profit organizations

In this essay, we are going to discuss the issues of financial management in a non-profit organisation.

  Method for estimating a venture''s value

Evaluate venture's present value, cash and surplus cash and basic venture capital.

  Replacement analysis

This document show the Replacement Analysis of modling machine. Is replacement give profit to company or not?

  Business finance task - capital budgeting

Your company is considering using the payback period for capital-budgeting. Discuss the advantages and disadvantages of this technique.

  Analysis of the investment

In this project, you will focus on one of these: the additional cost resulting from the purchase of an apple press (a piece of equipment required to manufacture apple juice).

  Conduct a what-if analysis

Review the readings and media for this unit, including the Anthony's Orchard case study media. Familiarise yourself with the Anthony's Orchard company and its current situation.

  Determine operational expenditures

Organisations' behaviour is guided by financial data. In the short term, such data will help determine operational expenditures; in the long term, historical data may help generate forecasts aimed at determining strategic plans. In both instances.

  Personal financial management

How much will you have left over each half year if you adopt the latter course of action?

  Sources of finance for expansion into new foreign markets

A quoted company is considering several long-term sources of finance for expansion into new foreign markets.

  Long term financial planning

This assignment is designed for analyze Long term financial planning begins with the sales forecast and the key input in the long term fincial planning.

  Explain the role of fincial manager

This assignment explain the role of fincial manager, function of manger. And what are the motives of financial manager.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd