The DOD just asked for a request for proposal (RFP) to deliver 10 armored vehicles over the
Question:
The DOD just asked for a request for proposal (RFP) to deliver 10 armored vehicles over the course of 5 years. The contract will pay 5 million per year with an incentive if all vehicles are delivered ahead of schedule starting with the fourth year with an additional 2 Million per additional vehicle delivered. In order to fulfill this kind of project, the company would have to hire 10 full time employees with average salaries of $80,000 per year with an additional cost per employee of $30,000 per year. An additional 1 Million in supplies will also be necessary. There will also have to be an infrastructure upgrade that will have to be completed at an estimated cost of 2 million dollars in order to house all supplies and assemble the products.
Calculate the NPV and IRR of the project. Should the project be done?
College Mathematics for Business Economics Life Sciences and Social Sciences
ISBN: 978-0321614001
12th edition
Authors: Raymond A. Barnett, Michael R. Ziegler, Karl E. Byleen