When the project concludes in four years the working

Assignment Help Accounting Basics

Reference no: EM13588868

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

Working Capital Needed	$87,000
Cost of Equipment Needed	$260,000
Overhaul of the equipment in 2 years	$10,500
Salvage Value of the equipment in 4 years	$13,500
Annual Revenues and Costs:
Sales Revenue	$430,000
Variable Expenses	$210,000
Fixed Out of Pocket Operating Costs	$88,000

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: EM13588868

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