Depreciate this cost straight-line to zero over the project

Assignment Help Financial Management
Reference no: EM13913316

Dahlia Enterprises needs someone to supply it with 116,000 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 you $830,000 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 $66,000. Your fixed production costs will be $321,000 per year, and your variable production costs should be $9.90 per carton. You also need an initial investment in net working capital of $71,000. If your tax rate is 34 percent and your required return is 10 percent on your investment, what bid price should you submit?

Reference no: EM13913316

Questions Cloud

Decided to bid on the contract : Dahlia Enterprises needs someone to supply it with 116,000 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. You also need an initial investment in net working c..
Tax effect of the sale based : Leon sells his interest in a passive activity for $100,000. Determine the tax effect of the sale based on each of the following independent facts:
How many units must be sold to break-even : Assume the variable cost and the price were both cut by $4.00 per unit. Which of the following would change?
Annual return mean and standard deviation : Woodpecker, Inc., stock has an annual return mean and standard deviation of 11.4 percent and 58 percent, respectively. What is the smallest expected loss in the coming month with a probability of 16.0 percent?
Depreciate this cost straight-line to zero over the project : Dahlia Enterprises needs someone to supply it with 116,000 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 you $830,000 to install the equipment n..
Find the acceleration of the blocks : A light inextensible string passing over a small, smooth pulley at the top of the plane connects the block to another 13 kg block hanging freely. The coefficient of kinetic friction between the 15 kg block and the plane is 0.25. Find the accelerati..
Prepare income statements showing percentages of net sales : Prepare multistep income statements for 2013 and 2014 showing percentages of net sales for each component (e.g., cost of goods sold divided by net sales).
What were the key points of contention on this given topic : TOPIC: ETHICS OF ORGAN TRANSPLANTATION, What were the key points of contention on this topic? What side of the argument (stance) do you take on this topic
Net operating income and contribution margin ratio : The net operating income for the company as a whole for June was?The contribution margin ratio for Product C is?

Reviews

Write a Review

Financial Management Questions & Answers

  Risk and return-determine whether stock prices are affected

Risk and Return" Please respond to the following: From the e-Activity, determine whether stock prices are affected more by long-term or short-term performance. Provide one (1) example of the effect that supports your claim.

  Find out who the producers of pvc pipe

Find out who the producers of PVC pipe are in the US and call up the plant and talk to the plant manager or the sales manager.

  What is the reward-to-volatility ratio for the equity fund

You manage an equity fund with an expected risk premium of 11% and a standard deviation of 24%. The rate on Treasury bills is 6.2%. Your client chooses to invest $80,000 of her portfolio in your equity fund and $20,000 in a T-bill money market fund. ..

  What is the depreciation tax shield for this project

Your firm needs a machine which costs $230,000, and requires $44,000 in maintenance for each year of its 10 year life. After 5 years, this machine will be replaced. The machine falls into the MACRS 10-year class life category. Assume a tax rate of 40..

  Brazilian real spot exchange rate

The US dollar (USD) to Brazilian real (BRL) spot exchange rate was 0.5793 USD/ BRL on September 21, 2010. By January 17, 2011 it had moved to 0.5934 USD/ BRL. The 30-day forward rate then was 0.6039 USD/ BRL. Calculate the appreciation/ depreciation ..

  An investment portfolio contains stocks of a large number

an investment portfolio contains stocks of a large number of corporations. over the last year the rates of return on

  Dual mandate to manage the aggregate price level

The Federal Reserve has a dual mandate to manage the aggregate price level (inflation) and employment in the US economy. Some economists argue that these two objectives may sometimes cause the Fed to focus too much on employment and cause problems wi..

  Preferred stock-common stock and market

The Saunders Investment Bank has the following financing outstanding. Debt: 120,000 bonds with a coupon rate of 8 percent and a current price quote of 110.0; the bonds have 20 years to maturity. Preferred stock: 210,000 shares of 6 percent preferred ..

  How much will the firm pay if it takes the cash discount

Lyman Nursuries purchased seeds costing $25,000 with terms of 3/15 net 30 EOM on January 12. How much will the firm pay if it takes the cash discount? What is the approximate cost of giving up the cash discount, the simplified formula?

  Recently announced that its next annual dividend

Precision Engineering recently announced that its next annual dividend will be $1.20 per share with later dividends increasing by 2.5 percent annually. What is the current value of this stock to you if you require a 12 percent rate of return?

  Discuss the following topic does arbitrage destabilize

discuss the following topic does arbitrage destabilize foreign exchange markets? arbitrage can be loosely defined as

  The bonds make semi annual payments

Grohl Co. issued 14-year bonds a year ago at a coupon rate of 9 percent. The bonds make semi annual payments. If the YTM on these bonds is 9 percent, what is the current bond price?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd