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Explain hoe to solve. Oakmont Company has an opportunity to manufacture and sell a new product for a four-year period. The company's discount rate is
Explain hoe to solve.
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: $ 220,000 $ 81,000 $ 7,500 $ 10,500 Cost of equipment needed Working capital needed Overhaul of the equipment in two years Salvage value of the equipment in four years Annual revenues and costs: Sales revenues Variable expenses Fixed out-of-pocket operating costs $ 370,000 $ 180,000 $ 82,000 When the project concludes in four years the working capital will be released for investment elsewhere within the company. Use Excel or a financial calculator to solve. Required: Calculate the net present value of this investment opportunity. (Round to the nearest dollar.) Net present valueStep by Step Solution
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