Problem $10-25$ Calculating a Bid Price $[$LO$3]$ Consider a project to supply $100$ million postage stamps per year to the U$.$S$.$ Postal Service for the next five years. You have an idle parcel of land available that cost $\backslash (\backslash$$ $1,705,000\backslash )$ five years ago; if the land were sold today, it would net you $\backslash (\backslash$$ $1,780,000\backslash )$ aftertax. The land can be sold for $\backslash (\backslash$$ $1,748,000\backslash )$ after taxes in five years. You will need to install $\backslash (\backslash$$ $5\mathrm{.}35\backslash )$ million in new manufacturing plant and equipment to actually produce the stamps; this plant and equipment will be depreciated straight$-$line to zero over the project's five$-$year life. The equipment can be sold for $\backslash (\backslash$$ $625,000\backslash )$ at the end of the project. You will also need $\backslash (\backslash$$ $575,000\backslash )$ in initial net working capital for the project, and an additional investment of $\backslash (\backslash$$ $50,000\backslash )$ in every year thereafter. Your production costs are $\mathrm{.}48$ cents per stamp, and you have fixed costs of $\backslash (\backslash$$ $1,050,000\backslash )$ per year. If your tax rate is $21$ percent and your required return on this project is $10$ percent, what bid price should you submit on the contract? Note: Do not round intermediate calculations and round your answer to $5$ decimal places, e$.$g$.,32\mathrm{.}16161.$ Bid price Problem $10-25$ Calculating a Bid Price $[$LO$3]$

Consider a project to supply $100$ million postage stamps per year to the U$.$S$.$ Postal Service for the next five years. You have an idle parcel of land available that cost $\backslash (\backslash$$ $1,705,000\backslash )$ five years ago; if the land were sold today, it would net you $\backslash (\backslash$$ $1,780,000\backslash )$ aftertax. The land can be sold for $\backslash (\backslash$$ $1,748,000\backslash )$ after taxes in five years. You will need to install $\backslash (\backslash$$ $5\mathrm{.}35\backslash )$ million in new manufacturing plant and equipment to actually produce the stamps; this plant and equipment will be depreciated straight$-$line to zero over the project's five$-$year life. The equipment can be sold for $\backslash (\backslash$$ $625,000\backslash )$ at the end of the project. You will also need $\backslash (\backslash$$ $575,000\backslash )$ in initial net working capital for the project, and an additional investment of $\backslash (\backslash$$ $50,000\backslash )$ in every year thereafter. Your production costs are $\mathrm{.}48$ cents per stamp, and you have fixed costs of $\backslash (\backslash$$ $1,050,000\backslash )$ per year. If your tax rate is $21$ percent and your required return on this project is $10$ percent, what bid price should you submit on the contract?

Note: Do not round intermediate calculations and round your answer to $5$ decimal places, e$.$g$.,32\mathrm{.}16161.$