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

After careful study, Oakmont estimated the following costs and revenues for the new product:

Cost of equipment needed $130,000 Working capital needed $60,000 Overhaul of the equipment in two years $8,000 Salvage value of the equipment in four year $12,000 Annual revenues and costs: Sales revenue $250,000 Variable expenses $120,000 Fixed out-of-pocket operating costs $70,000