Adequate information:
Number of units sold for Year 1 = 4,000
Number of units sold for Year 2 = 12,000
Number of units sold for Year 3 = 14,000
Number of units sold for Year 4 = 7,000
Price per unit = $135
Variable costs per unit (V) = $43
Fixed cost (FC) = $775,000
Pre-tax salvage value = $250,000
Cost of equipment = $3,600,000
Useful life of the equipment = 4 years
Net working capital (NWC) = $125,000
Quantity (Q) = 18,000 units
Tax rate (T) = 24% or 0.24
Required return (r) = 13% or 0.13
To compute: Bid price of the contract.
Introduction:
Bid price refers to the price which the investors are willing to pay for the purchase of security, commodity, or contract.
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