Question 4:

Oakmont Company has an opportunity to manufacture and sell a new product for a four-year period. The companys discount rate is 16%. After careful study, Oakmont estimated the following costs and revenues for the new product:

Cost of equipment needed	$ 150,000
Working capital needed	$ 64,000
Overhaul of the equipment in two years	$ 10,000
Salvage value of the equipment in four years	$ 14,000
Annual revenues and costs:
Sales revenues	$ 290,000
Variable expenses	$ 140,000
Fixed out-of-pocket operating costs	$ 74,000

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.)

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 16%. After careful study, Oakmont estimated the following costs and revenues for the new product: 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.) EXHIBIT 14B-1 Present Value of Sl;(1+r)n1 r1[1(1+r)n1]