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This answer was wrong. Please assist for Oakmont Company with obtaining right answer Oakmont Company has an opportunity to manufacture and sell a new product
This answer was wrong. Please assist for Oakmont Company with obtaining right answer
Oakmont Company has an opportunity to manufacture and sell a new product for a four-year period. The company's discount rate is 17%. After careful study. Oakmont estimated the following costs and revenues for the new product: Cost of equipment needed $190,000 Working capital needed $69,000 Overhaul of the equipment in two years $6,000 Salvage value of the equipment in four years $16, 500 Annual revenues and costs: Sales revenues $340,000 Variable expenses $165,000 Fixed out-of-pocket operating costs $79,000 When the project concludes in four years the working capital will be released for investment elsewhere within the company. Click here to view Exhibit 13B-1 and Exhibit 13B-2, to determine the appropriate discount factor(s) using tables. Required: Calculate the net present value of this investment opportunity. (Round discount factor(s) to 3 decimal places.)Step by Step Solution
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