Determination of equivalent annual cash flows


Question: Heer Enterprises needs someone to supply it with 252,000 cartons of machine screws each year to support its manufacturing needs over the next seven years, and you have decided to bid on the contract. It will cost you 1,310,400 dollars to install the equipment necessary to start production; you will depreciate this cost straight line to zero over the project's life. You determine that in seven years, this equipment can be salvaged for 84,000 dollars. Your fixed production costs will be 403,200 dollars per year, and your variable production costs should be $126.000. If your tax rate is 32% & you require a 17% return on your investment, you should submit a bid price of $_. [Give your answer to two decimal places]

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Finance Basics: Determination of equivalent annual cash flows
Reference No:- TGS017217

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