Use the Price-Bidding exercise for this question. Assume the variable cost of producing the cartons of precision machine screws is $9 and all other assumptions remain the same. What is the new minimum price for your bid?

Assumptions Cost of Capital = 16% Tax Rate = 35% Unit Sales = 150,000 Price per Unit= $12.11 Cost Per Unit = $8.50 Sales Growth = 0% Capital Expenditure $780,000 Annaul Depreciation $156,000 Year Unit Sales Sales Cost of Sales Gross Profit Selling, General & Admin. Depreciation EBIT Income Tax Unlevered Net Income Add Back Depreciation Subtract Capital Exp Subtract Change in NWC Free Cash Flow Discount Factor FCF Present Value NPV Required NWC Change in NWC Cash Flow Impact of change in NWC Present value PV(Cash Flow Impact of change in NWC) PV(Cash Flow Impact of capital expenditure) Present value PV(depreciation) "NPV = PV(cash flow impact of capital expenditure) + PV(cash flow impact of change in NWC) + PV(cash flow impact of net income and depreciation) " PV(cash flow impact of net income) Denote unlevered net income by letter C, then PV(unlevered net income from Year 1 to 5) = C * Present Value Annuity Factor Present Value Annuity Factor Unlevered net income