As a newly hired project manager, you have been assigned to prepare a bid proposal for a project that your organization is interested in bidding on to possibly obtain a new contract. The assigned project is estimated to cost on the magnitude of $20 million over the course of 5-years. Your organization intends to borrow the entire amount upfront to meet customer requirements and pay the debt off over the 5-year life of the project at an interest rate of 10% compounded annually. Including the principal and interest, what is the total cost of your project at the end of the 5-year life cycle? How much do you need to bid or earn from the work in terms of dollars to pay back the loan and still make some profit and cover operating expenses? Show all work and calculations to include selected formulae. Based on your calculations, what is the minimum estimate your organization should bid on your proposal, and why this is the case?In completing this assignment, please recall that you should calculate the future value. Please make sure to calculate future value for the initial $20M investment for each year up to 5-years. As a reminder, the future value calculation is as follows: FV=PV(1+i)5
To simplify this assignment, think of making annual payments on the 5-year loan. Keep it simple and clear. You must earn enough to repay the loan, cover operating costs, and make a profit.