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 two years $ 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 84000

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