Reference no: EM132517226
Oakmont Company has an opportunity to manufacture and sell a new product for a four-year period. The company's discount rate is 16%. After careful study, Oakmont estimated the following costs and revenues for the new product:
Cost of equipment needed $ 170,000
Working capital needed $ 68,000
Overhaul of the equipment in year two $ 12,000
Salvage value of the equipment in four years $ 16,000
Annual revenues and costs:
Sales revenues $ 330,000
Variable expenses $ 160,000
Fixed out-of-pocket operating costs $ 78,000
When the project concludes in four years the working capital will be released for investment elsewhere within the company.
Required:
Question 1: Calculate the net present value of this investment opportunity. (Round your final answer to the nearest whole dollar amount.)
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