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requires the delivery of 110,000 cartons of bolts per year for his manufacturing needs over the next 5 years. Khalid decided to bid for the contract. He would require $940,000 for the equipment to start production, and the equipment will depreciate straight line to 0. The fixed production cost is expected to be $850,000, and the variable cost will be $21.43 per carton. Additionally, the net working capital requirement is expected to be $90,000. Given the tax rate is 21%, the require rate of return is 12%, and the salvage value of the equipment is $75000, estimate the bid price you should submit?
Sagot :
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