Martin Enterprises needs someone to supply it with 1 2 8 , 0 0 0 cartons of
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Question:
Martin Enterprises needs someone to supply it with cartons of machine screws per year to support its manufacturing needs over the next five years, and youve decided to bid on the contract. It will cost you $ to install the equipment necessary to start production; youll depreciate this cost straightline to zero over the projects life. You estimate that, in five years, this equipment can be salvaged for $ Your fixed production costs will be $ per year, and your variable production costs should be $ per carton. You also need an initial investment in net working capital of $ Assume your tax rate is percent and you require a return of percent on your investment.
a
Assuming that the price per carton is $ what is the NPV of this project? Do not round intermediate calculations and round your answer to decimal places, eg
b Assuming that the price per carton is $ find the quantity of cartons per year that you can supply and still break even. Do not round intermediate calculations and round your answer to the nearest whole number, eg
c Assuming that the price per carton is $ find the highest level of fixed costs you could afford each year and still break even. Do not round intermediate calculations and round your answer to decimal places, eg
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