Question: Problem 12-18 Net Present Value Analysis (L012-2) Oakmont Company has an opportunity to manufacture and sell a new product for a four-year period. The company's
Problem 12-18 Net Present Value Analysis (L012-2) 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: $ 160,000 $ 66,000 $ 11,000 $ 15,000 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 Pixed out-of-pocket operating costa $ 210,000 $ 150,000 $ 16,000 When the project concludes in four years the working capital will be released for investment elsewhere within the company, Click here to view Exhibit 128-1 and Exhibit 128-2, to determine the appropriate discount factors) using tables Required: Calculate the net present value of this Investment opportunity. (Round your final answer to the nearest whole dollar amount.)
Step by Step Solution
There are 3 Steps involved in it
Get step-by-step solutions from verified subject matter experts
