Oakmont company has an opportunity to manufacture and sell

Reference no: EM13588892

Oakmont Company has an opportunity to manufacture and sell a new product for a four-year period. The company's discount rate is 18%. After careful study, Oakmont estimated the following costs and revenues for the new product:


Cost of equipment needed	$	160,000
Working capital needed	$	66,000
Overhaul of the equipment in two years	$	11,000
Salvage value of the equipment in four years	$	15,000

Annual revenues and costs:
Sales revenues	$	310,000
Variable expenses	$	150,000
Fixed out-of-pocket operating costs	$	76,000

When the project concludes in four years the working capital will be released for investment elsewhere within the company.

Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using tables.

Required:
Calculate the net present value of this investment opportunity. (Round discount factor(s) to 3 decimal places.)

Reference no: EM13588892

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