Question: Maintainit Inc is asked to submit a bid for watering

Maintainit Inc. is asked to submit a bid for watering and spraying trees in a housing development for the next five years. To provide this service, Maintainit would have to buy new equipment for $100,000 and invest $30,000 in working capital requirement. The equipment would be depreciated straight-line to zero salvage value over the five-year period. Total labor and other costs would be $80,000 a year. The tax rate is 40 percent and Maintainit's cost of capital is 10 percent.
What would Maintainit's minimum bid price need to be?

Sale on SolutionInn
  • CreatedMarch 27, 2015
  • Files Included
Post your question