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

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Accounting

Oakmont Company has an opportunity to manufacture and sell a new product for a four-year period. The companys discount rate is 17%. After careful study, Oakmont estimated the following costs and revenues for the new product: Cost of equipment needed $ 240,000 Working capital needed $ 83,000 Overhaul of the equipment in year two $ 7,000 Salvage value of the equipment in four years $ 11,500 Annual revenues and costs: Sales revenues $ 390,000 Variable expenses $ 190,000 Fixed out-of-pocket operating costs $ 84,000 When the project concludes in four years the working capital will be released for investment elsewhere within the company. Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using tables. (Use the tables to get your discount factors. The linked tables are the same tables as the ones in your course packet. If you calculate discount factors using Excel or a financial calculator, your answer may be different enough due to rounding that the system marks it wrong.) Required: Calculate the net present value of this investment opportunity. (Round your final answer to the nearest whole dollar amount.)

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