Homework Help is Here – Start Your Trial Now!
Business
Finance
Your company wants to bid on the sale of 10 customized machines per year for five years. The initial costs for the project are €1.6 million with a salvage value of €800,000 after five years. The machine will be depreciated straight- line to zero over the five years. Annual fixed costs are estimated at €700,000. Variable cost per machine is €81,500. The project requires net working capital of €120,000. The company has a 34% tax rate and desires a 15% return on the project. What is the minimum price that the company should bid per single machine? €198,196 €212,028 €219,887 €221,009 None of the above.

Your company wants to bid on the sale of 10 customized machines per year for five years. The initial costs for the project are €1.6 million with a salvage value of €800,000 after five years. The machine will be depreciated straight- line to zero over the five years. Annual fixed costs are estimated at €700,000. Variable cost per machine is €81,500. The project requires net working capital of €120,000. The company has a 34% tax rate and desires a 15% return on the project. What is the minimum price that the company should bid per single machine? €198,196 €212,028 €219,887 €221,009 None of the above.

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
See similar textbooks
icon
Related questions
Question

Your company wants to bid on the sale of 10 customized machines per year for five years. The initial costs for the project are €1.6 million with a salvage value of €800,000 after five years. The machine will be depreciated straight- line to zero over the five years. Annual fixed costs are estimated at €700,000. Variable cost per machine is €81,500. The project requires net working capital of €120,000. The company has a 34% tax rate and desires a 15% return on the project. What is the minimum price that the company should bid per single machine?

    1. €198,196

    2. €212,028

    3. €219,887

    4. €221,009

    5. None of the above.

Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 5 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
Essentials Of Investments
Essentials Of Investments
Finance
ISBN:
9781260013924
Author:
Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:
Mcgraw-hill Education,
FUNDAMENTALS OF CORPORATE FINANCE
FUNDAMENTALS OF CORPORATE FINANCE
Finance
ISBN:
9781260013962
Author:
BREALEY
Publisher:
RENT MCG
Financial Management: Theory & Practice
Financial Management: Theory & Practice
Finance
ISBN:
9781337909730
Author:
Brigham
Publisher:
Cengage
Foundations Of Finance
Foundations Of Finance
Finance
ISBN:
9780134897264
Author:
KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher:
Pearson,
Fundamentals of Financial Management (MindTap Cou…
Fundamentals of Financial Management (MindTap Cou…
Finance
ISBN:
9781337395250
Author:
Eugene F. Brigham, Joel F. Houston
Publisher:
Cengage Learning
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Corporate Finance (The Mcgraw-hill/Irwin Series i…
Finance
ISBN:
9780077861759
Author:
Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS