What bid price should it submit

Assignment Help Accounting Basics
Reference no: EM133044203

Question - Setting a Bid Price - Company A needs to determine a bid price for a project it has received from Company B. Company B is looking for a Producer to supply it with 450,000 widgets each year for the next seven years. To undertake this project, company A will have to install new equipment at a cost of $510,000. This will be considered a Class 8 asset with a 20% CCA rate and is subject to Accelerated Investment Incentive rules. Company A expects to sell the equipment for $125,000 after 7 years. Annual productions costs are estimated as follows: variable costs per widget of $7.00 and fixed costs of $130,000 per year. Company A expects the new contract would lead to an immediate increase of $35,000 in NWC, which will be recovered at the end of the project. The firm has a 30% tax rate and it wants a 15% return. What bid price should it submit? What is the correct value for Step #1?

Reference no: EM133044203

Questions Cloud

What is the balance due to nisha ltd at august : On 15th August, Tasha returned one-third of the goods to the supplier. What is the balance due to Nisha Ltd at 30th August
What is the project after-tax cost of debt : Issue 3,200 6% preferred stock with $100 par value which are currently priced at $125 per share. What is the project after-tax cost of debt
What will target new wacc be : There are currently 32,000 shares outstanding and the marginal tax rate is 34%. What will Target's new WACC be
What is the total of tim liabilities : Question - What is the total of Tim's liabilities if he has recorded $50,000 in assets and $40,000 equity on a balance sheet
What bid price should it submit : Company B is looking for a Producer to supply it with 450,000 widgets each year for the next seven years. What bid price should it submit
Determine the total cost that should have been recorded : On March 21, 2021, Christine worked 7.0 hours on Job A-1, and 3 hours on general "overhead activities." Determine the total cost that should have been recorded
Health information systems-standards-policy : Discuss how you would go about implementing a health information technology (HIT) strategic plan for data security, privacy, and quality management
Determine the material price variance : Determine the material price variance and the material quantity variance for March. Indicate whether each variance is favorable or unfavorable
What is the present value of the net profit : What is the present value of the net profit if the vintner sells the wine after barrel aging it for a further year? Please show your work

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

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