You are evaluating a bid price problem in which the project is five years in duration and involves an initial capital expenditure of $840,000 that is depreciated over 5 years. The salvage value of the equipment is $60,000 and the firm’s tax rate is 35%. Fixed costs are $290,000 and total variable costs are $1,360,000. Some of the bid price work has been done for you and you know OCF must be $235,885.19. Furthermore, the net income necessary for a $0 NPV is calculated as $67,885. If, each year, the request for proposal asks for 235 units to be produced, which is closest to the minimum bid price per unit? ,,The answer should be $8,181,,I just can’t figure out. Please help.
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