What is the minimum annual value you can bid

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Question

You are working on a bid for a 4-year contract. Thus far, you have determined that you will need $156,000 for fixed assets that will be depreciated straight-line to zero over the life of the project and then salvaged for 48,000. You will need $32,000 for net working capital at Time 0, but the entire amount will be recoverable at the end of the project. If your costs for this contract will run $122,000 annually, and you face a 21 percent tax rate, what is the minimum annual value you can bid for this contract and still return 16 percent in nominal terms?

Reference no: EM133432501

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