Prepare a bid for proposed contract

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Reference no: EM131499693

Assume you need to prepare a bid for a proposed contract. Your CFO has indicated he wants to target a minimum NPV for the project of $100,000. Other bid data include:

The production of 200,000 units of your product each year for the next 5 years. A fixed production cost per year of $375,000. A variable cost of production per unit of $14.00 An initial equipment and installation cost of $2,500,000 An expected salvage value for the equipment in 5 years of $315,000. Straight line 5-year depreciation on the equipment to a $0 salvage value. Initial NWC investment of $100,000, reversible at the end of the project. Company marginal tax rate of 35%. Cost of capital is 17%. Calculate your proposed bid in excel:

Reference no: EM131499693

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