Your company wants to bid on the sale of 10 customized machines per year for five years. The initial costs for the project are €1.6 million with a salvage value of €800,000 after five years. The machine will be depreciated straight- line to zero over the five years. Annual fixed costs are estimated at €700,000. Variable cost per machine is €81,500. The project requires net working capital of €120,000. The company has a 34% tax rate and desires a 15% return on the project. What is the minimum price that the company should bid per single machine? €198,196 €212,028 €219,887 €221,009 None of the above.

Your company wants to bid on the sale of 10 customized machines per year for five years. The initial costs for the project are €1.6 million with a salvage value of €800,000 after five years. The machine will be depreciated straight- line to zero over the five years. Annual fixed costs are estimated at €700,000. Variable cost per machine is €81,500. The project requires net working capital of €120,000. The company has a 34% tax rate and desires a 15% return on the project. What is the minimum price that the company should bid per single machine? €198,196 €212,028 €219,887 €221,009 None of the above.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter9: Capital Budgeting And Cash Flow Analysis

Section: Chapter Questions

Problem 5P

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