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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
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 Cost of equipment needed $270,000 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 $ 90,000 $ 9,000 $ 14,500 $ 450,00 $220,000 $ 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 148-1 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.) Net present value
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