Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. oakmont company has an opportunity to manufacture

Oakmont Company has an opportunity to manufacture and sell a new product for a four-year...

90.2K

Verified Solution

Question

Accounting

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:

Cost of equipment needed $ 270,000
Working capital needed $ 90,000
Overhaul of the equipment in year two $ 9,000
Salvage value of the equipment in four years $ 14,500
Annual revenues and costs:
Sales revenues $ 450,000
Variable expenses $ 220,000
Fixed out-of-pocket operating costs $ 90,000

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

Click here to view Exhibit 14B-1 and Exhibit 14B-2, to determine the appropriate discount factor(s) using tables.

Required:

Calculate the net present value of this investment opportunity. (Round your final answer to the nearest whole dollar amount.)

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

Discuss the importance of electrons in the transfer of energy in living systems. Be sure to...

Biology
Q

A speaker at an open-air concert emits 500 W of sound power, radiated equally in all...

Physics
Q

A high school diploma is important to my future Write an eight sentence paragraph that...

Biology
Q

1 Work done by the force F x yi N in displacing a body from...

Physics
Q

Which is true regarding secants and chords O Chords intersect the perimeter of a circle...

Geometry
Q

Given the Initial Value and Rate of Change write the exponential function for each of...

Basic Math
Q

Notes PayableA business issued a 60-day, 8% note for $43,000 to a creditor for an...

Accounting
Q

The percentage complete for the beginning and ending inventory is an important figure to determine...

Accounting
Q

[The following information apples to the quesilions displayed betow] Chavez Company most rocently...

Accounting
Q

Choose and describe a business or product that you think has a particularly high or...

Accounting
Q

Present value of bonds payable; premium Moss Co. Issued $660,000 of five-year, 12% bonds,...

Accounting
Q

Capital assets are amortizes based on the following information Equipment Acquisition date Cost rsiduel value...

Accounting