Reference no: EM132798027

Question - Reed needs new toques. You are considering bidding on a project. The project details include:

4 year life

Initial investment of $50,000 in working capital

Upfront costs of $175,000 for a new injection-moulding machine.

$20,000 in yearly pre-tax operating costs

Your company has a tax rate of 35%

Your company's required rate of return is 15%

At the end of 4 years you can sell the equipment for $30,000

There is no depreciation consideration for this equipment.

Required -

a. Complete the following table and calculate the net present value for the project costs.

b. What is the projects Equivalent Annual Cost?

c. If the contract requires you to make 15,000 toques, what is the minimum amount you would bid/toque?