Calculate net present value of given investment opportunity

Assignment Help Accounting Basics

Reference no: EM131931599

Problem

Oakmont Company has an opportunity to manufacture and sell a new product for a four-year period. The company's discount rate is 17%. After careful study, Oakmont estimated the following costs and revenues for the new product:

Cost of equipment needed $ 155,000
Working capital needed $ 65,000
Overhaul of the equipment in two years $ 9,000
Salvage value of the equipment in four years $ 14,500
Annual revenues and costs:
Sales revenues $ 300,000
Variable expenses $ 145,000
Fixed out-of-pocket operating costs $ 75,000

Required:

Calculate the net present value of this investment opportunity.

Reference no: EM131931599

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