Problem 14-18 (Algo) Net Present Value Analysis (LO14-2] Oakmont Company has an opportunity to manufacture and sell a new product for a four-year period. The company's discount rate is 15%. After careful study, Oakmont estimated the following costs and revenues for the new product: $ 145,000 $ 63,000 $ 9,500 $ 13,500 Cost of equipment needed Working capital needed Overhaul of the equipment in year two Salvage value of the equipment in four years Annual revenues and costs: Sales revenues Variable expenses Fixed out-of-pocket operating costs $ 280,000 $ 135,000 $ 73,000 When the project concludes in four years the working capital will be released for investment elsewhere within the company. Click here to view Exhibit 14B-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 EXHIBIT 14B-1 Present Value of $1; 1 (1+r) n Periods 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 40 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 16% 17% 18% 19% 20% 21 % 22% 23% 24% 25% 0.962 0.952 0.943 0.935 0.926 0.917 0.909 0.901 0.893 0.885 0.877 0.870 0.862 0.855 0.847 0.840 0.833 0.826 0.820 0.813 0.806 0.800 0.925 0.907 0.890 0.873 0.857 0.842 0.826 0.812 0.797 0.783 0.769 0.756 0.743 0.731 0.7180.706 | 0.694 0.683 0.672 0.661 0.650 0.640 0.889 0.864 0.840 0.816 0.794 0.772 0.751 0.731 0.712 0.693 0.675 0.658 0.641 0.624 0.609 0.593 0.579 0.564 0.551 0.537 0.524 0.512 0.855 0.823 0.792 0.763 0.735 0.708 0.6830.659 0.636 0.613 0.592 0.572 0.552 0.534 0.516 0.499 0.482 0.467 0.451 0.437 0.423 0.410 0.822 0.784 0.784 0.747 0.713 0.681 0.650 0.621 0.593 0.567 0.543 0.519 0.497 0.476 0.456 0.437 0.419 0.402 0.386 0.370 0.355 0.341 0.328 0.790 0.746 0.705 0.6660.630 0.596 0.564 0.535 0.507 0.480 0.456 0.432 0.410 0.390 0.370 0.352 0.335 0.319 0.3030.2890.275 0.262 0.760 0.711 0.665 0.623 0.583 0.547 0.513 0.482 0.452 0.425 0.400 0.376 0.354 0.333 0.314 0.296 0.279 0.263 0.2490.235 0.222 0.210 0.731 0.677 0.627 0.5820.540 0.502 0.467 0.434 0.404 0.376 0.351 0.327 0.305 0.285 0.266 0.2490.233 0.218 0.204 0.191 0.179 0.168 0.703 0.6450.592 0.544 0.500 0.460 0.424 0.391 0.361 0.333 0.333 0.308 0.284 0.263 0.243 0.225 0.209 0.194 0.180 0.167 0.155 0.144 0.134 0.676 0.614 0.558 0.508 0.463 0.422 0.386 0.352 0.322 0.295 0.270 0.247 0.227 0.208 0.191 0.176 0.162 0.149 0.137 0.126 0.116 0.107 0.650 0.585 0.527 0.475 0.429 0.388 0.350 0.317 0.287 0.261 0.237 0.215 0.195 0.178 0.162 0.148 0.135 0.123 0.112 0.103 0.094 0.086 0.625 0.557 0.497 0.444 0.397 0.356 0.319 0.286 0.257 0.231 0.208 0.187 0.168 0.152 0.137 0.124 0.112 0.102 0.092 0.083 0.076 0.069 0.601 0.530 0.469 0.415 0.368 0.326 0.290 0.258 0.229 0.204 0.182 0.163 0.145 0.130 0.116 0.104 0.093 0.084 0.075 0.068 0.061 0.055 0.577 0.505 0.442 0.388 0.340 0.299 0.263 0.232 0.205 0.181 0.160 0.141 0.125 0.111 0.099 0.088 0.078 0.069 0.062 0.055 0.049 0.044 0.555 0.481 0.417 0.362 0.315 0.275 0.239 0.209 0.183 0.160 0.140 0.123 0.108 0.095 0.084 0.074 0.065 0.057 0.051 0.045 0.040 0.035 0.534 0.458 0.394 0.339 0.292 0.252 0.218 0.188 0.163 0.141 0.123 0.107 0.093 0.081 0.071 0.0620.054 0.047 0.042 0.036 0.032 0.028 0.513 0.436 0.371 0.317 0.270 0.231 0.198 0.170 0.146 0.125 0.108 0.093 0.080 | 0.069 0.060 0.052 0.045 0.039 0.034 0.030 0.026 0.023 0.494 0.416 0.350 0.296 0.250 0.212 0.1800.153 0.130 0.111 0.095 0.081 0.069 0.059 0.051 0.044 0.038 0.032 0.028 0.024 0.021 0.018 0.475 0.396 0.331 0.277 0.232 0.194 0.164 0.138 0.116 0.098 0.083 0.070 | 0.060 0.051 0.043 0.037 0.031 0.027 0.023 0.0200.017 0.014 0.456 0.377 0.312 0.258 0.215 0.178 0.149 0.124 0.104 0.087 0.073 0.061 0.051 0.043 0.037 0.031 0.026 0.022 0.019 0.016 0.014 0.012 0.439 0.359 0.294 0.2420.199 0.164 0.135 0.112 0.093 0.077 0.064 0.053 0.044 0.037 0.031 0.026 0.022 0.018 0.015 0.013 0.011 0.009 0.422 0.342 0.278 0.226 0.184 0.150 0.123 0.101 0.083 0.068 0.056 0.046 0.038 0.032 0.026 0.022 0.0180.015 0.013 0.0110.009 0.007 0.406 0.326 0.262 0.211 0.170 0.138 0.112 0.091 0.074 0.060 0.049 0.040 0.033 0.027 0.022 0.0180.015 0.0120.010 0.00 0.007 0.006 0.390 0.310 0.247 0.197 0.158 0.126 0.1020.082 0.066 0.053 0.043 0.035 0.028 0.023 0.019 0.015 0.013 0.010 0.008 0.007 0.006 0.005 0.375 0.295 0.233 0.184 0.146 0.116 0.092 0.074 0.059 0.047 0.038 0.030 0.024 0.0200.0160.013 0.010 0.00 0.007 0.006 0.005 0.004 0.361 0.281 0.220 0.172 0.135 0.106 0.084 0.066 0.053 0.042 0.033 0.026 0.021 0.017 0.014 0.0110.009 0.007 0.006 0.005 0.004 0.003 0.347 0.268 0.207 0.161 0.125 0.098 0.076 0.060 0.047 0.037 0.029 0.023 0.018 0.014 0.011 0.009 0.007 0.006 0.005 0.004 0.003 0.002 0.333 0.255 0.255 0.1960.150 0.116 0.090 0.069 0.054 0.042 0.033 0.026 0.0200.0160.012 0.010 0.008 0.006 0.005 0.004 0.003 0.002 0.002 0.321 0.243 0.185 0.141 0.107 0.082 0.063 0.048 0.037 0.029 0.022 0.017 | 0.014 0.011 0.008 0.006 0.005 0.004 0.003 0.002 0.002 0.002 0.308 0.231 0.174 0.131 0.099 0.075 0.057 0.044 0.033 0.026 0.0200.015 0.012 0.009 0.007 0.005 0.004 0.003 0.003 0.002 0.002 0.001 0.208 0.142 0.097 0.067 0.046 0.032 0.022 0.015 0.011 0.008 0.005 0.004 0.003 0.002 0.001 0.001 0.001 0.000 0.000 0.000 0.000 0.000 EXHIBIT 14B-2 Present Value of an Annuity of $1 in Arrears; 1 r[1-1(1+r)n] Periods 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 40 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 16% 17% 18% 19% 20% 21 % 22% 0.962 0.952 0.943 0.935 0.926 0.917 0.909 0.901 0.893 0.885 0.877 0.870 0.862 0.855 0.847 0.840 0.833 0.826 0.820 1.886 1.859 1.833 | 1.808 1.783 1.759 1.736 1.713 | 1.690 1.668 1.647 1.626 1.605 1.585 | 1.566 1.547 | 1.528 1.509 | 1.492 2.775 2.723 2.673 2.624 2.577 2.531 2.487 2.444 2.402 2.361 2.322 2.283 2.246 2.210 2.174 | 2.140 2.106 2.074 | 2.042 3.630 3.546 3.465 3.387 3.312 3.240 3.170 3.102 3.037 2.974 2.914 | 2.855 2.798 2.743 2.6902.639 2.589 2.540 2.494 4.452 4.329 4.212 4.100 3.993 3.890 3.791 3.696 3.605 3.517 3.433 3.352 3.274 3.199 3.127 3.058 2.991 2.926 | 2.864 5.242 5.076 4.917 4.767 4.623 4.486 4.355 4.231 4.111 3.998 3.889 3.784 3.685 3.589 3.498 3.410 3.326 3.245 3.167 6.002 5.786 5.582 5.389 5.206 5.033 4.868 4.712 4.564 4.423 4.288 4.160 4.039 3.922 3.812 3.706 3.605 3.508 3.416 6.733 6.463 6.210 5.971 5.747 5.535 5.335 5.146 | 4.968 4.799 4.639 4.487 4.344 4.207 4.078 3.954 3.837 3.726 3.619 7.435 7.108 6.802 6.515 6.247 5.995 5.759 5.537 5.328 5.132 4.946 4.772 4.607 4.451 4.303 4.163 4.031 3.905 3.786 8.111 | 7.722 7.360 7.0246.710 6.418 6.145 5.889 5.6505.426 5.216 5.019 4.833 4.659 4.494 4.3394.1924.054 3.923 8.760 8.306 7.887 7.499 7.139 6.805 6.495 6.207 5.938 5.687 5.453 5.234 5.029 4.836 4.656 4.486 4.327 4.177 4.035 9.385 8.863 8.384 7.943 7.536 7.161 6.814 6.4926.1945.918 5.660 5.421 5.197 4.988 4.793 4.611 4.439 4.278 4.127 9.986 9.394 8.853 8.358 7.904 7.487 7.103 6.750 6.424 6.122 5.842 5.583 5.342 5.118 4.910 4.715 4.533 4.362 4.203 10.563 | 9.899 9.295 8.745 8.244 7.786 | 7.3676.982 6.628 6.302 6.002 5.724 | 5.468 5.229 5.008 4.802 4.6114.432 4.265 11.118 10.380 | 9.712 9.108 8.559 8.061 7.606 7.191 6.811 6.462 6.142 5.847 5.575 5.324 5.092 4.876 4.675 4.489 4.315 11.652 10.838 10.106 9.447 8.851 8.313 7.824 7.3796.974 6.604 6.265 5.954 5.668 5.405 5.162 4.938 4.730 4.536 4.357 12.166 11.274 10.477 | 9.763 9.122 8.544 8.022 7.549 7.120 6.729 6.373 6.047 5.749 5.475 5.222 4.990 4.775 4.576 4.391 12.659 11.690 10.828 10.059 9.3728.756 8.201 7.702 7.250 6.840 6.467 6.128 5.818 5.534 5.273 5.033 4.812 4.608 4.419 13.134 12.085 | 11.158 10.336 9.604 8.950 8.365 7.8397.3666.938 6.550 6.198 5.877 5.584 5.316 5.070 4.843 4.635 4.442 13.590 | 12.462 | 11.470 10.594 | 9.818 9.129 8.514 7.963 7.469 7.025 6.623 6.259 5.929 5.628 5.3535.101 4.870 4.657 4.460 14.029 | 12.821 11.764 10.836 10.017 | 9.292 8.649 8.075 | 7.562 7.102 6.687 6.312 5.9735.665 5.384 5.127 4.891 4.675 4.476 14.451 13.163 12.042 11.061 | 10.201 | 9.442 8.772 8.176 7.645 7.170 6.743 6.359 6.011 5.696 5.410 5.149 4.909 4.690 4.488 14.857 | 13.489 12.303 11.272 10.371 9.580 8.883 8.266 7.718 7.230 6.792 6.399 6.044 5.723 5.432 5.167 4.925 4.703 4.499 15.247 13.799 12.550 11.469 10.529 9.707 8.985 8.348 7.784 7.283 6.835 6.434 6.073 5.746 5.451 5.182 4.937 4.713 4.507 15.622 14.094 12.783 11.654 10.675 9.823 9.077 8.422 7.843 7.330 6.873 6.464 | 6.097 | 5.766 5.467 5.195 4.948 4.721 4.514 15.983 14.375 13.003 11.826 10.810 | 9.929 9.161 8.488 7.896 7.372 6.906 6.491 6.118 5.783 5.480 5.206 4.956 4.728 4.520 16.330 14.643 13.211 11.987 10.935 | 10.027 9.237 8.548 7.943 7.409 6.935 6.514 6.136 5.798 5.492 5.215 4.964 | 4.734 4.524 16.663 14.898 13.406 12.137 11.051 | 10.116 | 9.307 8.602 7.984 7.441 6.961 6.534 6.152 5.810 5.502 5.223 4.970 4.739 4.528 16.984 15.141 13.591 12.278 11.158 10.1989.370 8.650 8.022 7.470 6.983 6.551 6.166 5.820 5.510 5.2294.975 4.743 4.531 17.292 15.372 13.765 12.409 11.258 10.2749.427 8.694 8.0557.496 7.003 6.566 6.177 5.829 5.517 5.235 4.979 4.7464.534 19.793 17.159 15.046 13.332 11.925 10.7579.779 8.951 8.244 7.634 7.105 6.642 6.233 5.871 5.548 5.2584.997 4.760 4.544 23% 24% 25% 0.813 0.806 0.800 1.474 | 1.457 | 1.440 2.011 1.981 1.952 2.448 2.404 2.362 2.803 2.745 2.689 3.092 3.020 | 2.951 3.327 3.242 3.161 3.518 3.421 3.329 3.673 3.566 3.463 3.799 3.682 3.571 3.902 3.776 3.656 3.985 3.851 3.725 4.053 3.912 3.780 4.108 3.962 3.824 4.153 4.001 3.859 4.189 4.033 3.887 4.219 4.059 3.910 4.243 4.080 3.928 4.263 4.097 3.942 4.279 4.110 3.954 4.292 4.121 3.963 4.302 4.130 3.970 4.311 4.137 3.976 4.318 4.143 3.981 4.323 4.147 | 3.985 4.328 4.151 3.988 4.332 4.154 3.990 4.335 4.157 3.992 4.337 4.159 3.994 4.339 4.160 3.995 4.347 4.166 3.999 Required: 1. What are the annual net cash inflows that will be provided by the new dipping machine? 2. Compute the new machine's net present value. Complete this question by entering your answers in the tabs below. Required 1 Required 2 What are the annual net cash inflows that will be provided by the new dipping machine? Total annual net cash inflows Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the new machine's net present value. (Enter negative amount with a minus sign. Round your final answer to the nearest whole dollar amount.) Net present value