Problem $6-34$ Calculating a Bid Price

Martin Enterprises needs someone to supply it with $215,000$ cartons of machine screws

per year to support its manufacturing needs over the next five years, and you've decided

to bid on the contract. It will cost $$2,700,000$ to install the equipment necessary to start

production; you'll depreclate this cost straight$-$Ine to zero over the project's IIfe. You

estimate that, In five years, this equipment can be salvaged for $$225,000.$ Your fixed

production costs will be $$710,000$ per year, and your varlable production costs should be

$$9\mathrm{.}55$ per carton. You also need an Initlal investment in net working capital of $$380,000.$

If your tax rate is $23$ percent and you require a $11$ percent return on your investment,

what bid price per carton should you submlt? $($Do not round Intermedlate calculations

and round your answer to $2$ decimal places, e$.$g$.,32\mathrm{.}16.)$

Answer is complete but not entirely correct.Martin Enterprises needs someone to supply it with $215,000$ cartons of machine screws per year to support its manufacturing needs over the next five years, and you$$ve decided to bid on the contract. It will cost $$2,700,000$ to install the equipment necessary to start production; you$$ll depreciate this cost straight$-$line to zero over the project$$s life. You estimate that, in five years, this equipment can be salvaged for $$225,000.$ Your fixed production costs will be $$710,000$ per year, and your variable production costs should be $$9\mathrm{.}55$ per carton. You also need an initial investment in net working capital of $$380,000.$ If your tax rate is $23$ percent and you require a $11$ percent return on your investment, what bid price per carton should you submit? $($Do not round intermediate calculations and round your answer to $2$ decimal places, e$.$g$.,32\mathrm{.}16.)$