Suppose that relevant tax rate is 34 percent if no-shoplift

Reference no: EM13475553

The No-Shoplift Security Company is interested in bidding on a contract to provide a new security system for a large department store chain. The new security system would be phased into 10 stores per year for five years. No-Shoplift can purchase the hardware for $50,000 per installation. The labor and material cost per installation is approximately $15,000. In addition, No-Shoplift will need to purchase $100,000 in new equipment for the installation, which will be depreciated to zero using the straight-line method over five years. This equipment will be sold in five tears for $25,000. Finally, an investment of $50,000 in net working capital will be needed. Assume that the relevant tax rate is 34 percent. If the No-Shoplift security Company requires a 10 percent return on its investments, what price should it bid?

Reference no: EM13475553

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