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In: Accounting
Question 4: Your company has been approached to bid on a contract to sell 10 phone...
Question 4: Your company has been approached to bid on a contract to sell 10 phone booths each year for the next 5 years. Your initial equipment cost will be $5,000. You’ll depreciate this cost straight-line to zero over the next 5 years. You believe the equipment can be repurposed and salvaged for $2,000. You expect fixed costs each year to amount to $500 with variable costs equal to $1,000/booth. Initial NWC needs are $750 and are fully recovered at the end of the project. If your required rate of return is 15%, what price per phone booth should you bid? Assume a tax rate of 20%.
Solutions
ekkarill92 answered 2 years agoRelated Solutions
Calculating a Bid Price Your company has been approached to bid on a contract to sell...
Calculating a Bid Price Your company has been
approached to bid on a contract to sell 15,000 voice recognition
(VR) computer keyboards a year for four years. Due to technological
improvements, beyond that time they will be outdated and no sales
will be possible. The equipment necessary for the production will
cost $3.4 million and will be depreciated on a straight-line basis
to a zero salvage value. Production will require an investment in
net working capital of $75,000 to be...
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Your company has been approached to bid on a contract to sell
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will be outdated and no sales will be possible. The equipment
necessary for the production will cost $3.6 million and will be
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Production will require an investment in net working capital of
$420,000 to be returned at the end...
Your company has been approached to bid on a contract to sell 5,700 voice recognition (VR)...
Your company has been approached to bid on a contract to sell
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Your company has been approached to bid on a contract to sell 3,600 voice recognition (VR)...
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necessary for the production will cost $3.2 million and will be
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will be outdated and no sales will be possible. The equipment
necessary for the production will cost $4 million and will be
depreciated on a straight-line basis to a zero salvage value.
Production will require an investment in net working capital of
$440,000 to be returned at the end...
Your company has been approached to bid on a contract to sell 4,700 voice recognition (VR)...
Your company has been approached to bid on a contract to sell
4,700 voice recognition (VR) computer keyboards a year for four
years. Due to technological improvements, beyond that time they
will be outdated and no sales will be possible. The equipment
necessary for the production will cost $4.3 million and will be
depreciated on a straight-line basis to a zero salvage value.
Production will require an investment in net working capital of
$100,000 to be returned at the end...
Your company has been approached to bid on a contract to sell 4,300 voice recognition (VR)...
Your company has been approached to bid on a contract to sell
4,300 voice recognition (VR) computer keyboards a year for four
years. Due to technological improvements, beyond that time they
will be outdated and no sales will be possible. The equipment
necessary for the production will cost $3.9 million and will be
depreciated on a straight-line basis to a zero salvage value.
Production will require an investment in net working capital of
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Your company has been approached to bid on a contract to sell 5,450 voice recognition (VR)...
Your company has been approached to bid on a contract to sell
5,450 voice recognition (VR) computer keyboards a year for four
years. Due to technological improvements, beyond that time they
will be outdated and no sales will be possible. The equipment
necessary for the production will cost $4.4 million and will be
depreciated on a straight-line basis to a zero salvage value.
Production will require an investment in net working capital of
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Your company has been approached to bid on a contract to sell 4,300 voice recognition (VR)...
Your company has been approached to bid on a contract to sell
4,300 voice recognition (VR) computer keyboards a year for four
years. Due to technological improvements, beyond that time they
will be outdated and no sales will be possible. The equipment
necessary for the production will cost $3.9 million and will be
depreciated on a straight-line basis to a zero salvage value.
Production will require an investment in net working capital of
$96,000 to be returned at the end...
Your company has been approached to bid on a contract to sell 3,700 voice recognition (VR)...
Your company has been approached to bid on a contract to sell
3,700 voice recognition (VR) computer keyboards a year for four
years. Due to technological improvements, beyond that time they
will be outdated and no sales will be possible. The equipment
necessary for the production will cost $3.3 million and will be
depreciated on a straight-line basis to a zero salvage value.
Production will require an investment in net working capital of
$90,000 to be returned at the end...
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