1 Problem 14-18 (Algo) Net Present Value Analysis [LO14-2] Print Oakmont Company has an opportunity to manufacture and sell a new product for a four-year period. The company's discount rate is 17% and it estimated the following costs and revenues for the new product: Cost of equipment needed Working capital needed Overhaul of the equipment in two years Salvage value of the equipment in four years. Annual revenues and costs: Sales revenues Variable expenses Fixed out-of-pocket operating costs $ 190,000 $ 69,000 $ 6,000 $ 16,500 $ 340,000 $ 165,000 $ 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 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. Note: Round your final answer to the nearest whole dollar amount. Net present value
1 Problem 14-18 (Algo) Net Present Value Analysis [LO14-2] Print Oakmont Company has an opportunity to manufacture and sell a new product for a four-year period. The company's discount rate is 17% and it estimated the following costs and revenues for the new product: Cost of equipment needed Working capital needed Overhaul of the equipment in two years Salvage value of the equipment in four years. Annual revenues and costs: Sales revenues Variable expenses Fixed out-of-pocket operating costs $ 190,000 $ 69,000 $ 6,000 $ 16,500 $ 340,000 $ 165,000 $ 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 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. Note: Round your final answer to the nearest whole dollar amount. Net present value
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Problem 14-18 (Algo) Net Present Value Analysis [LO14-2]
Print
Oakmont Company has an opportunity to manufacture and sell a new product for a four-year period. The company's discount rate
is 17% and it estimated the following costs and revenues for the new product:
Cost of equipment needed
Working capital needed
Overhaul of the equipment in two years
Salvage value of the equipment in four years.
Annual revenues and costs:
Sales revenues
Variable expenses
Fixed out-of-pocket operating costs
$ 190,000
$ 69,000
$ 6,000
$ 16,500
$ 340,000
$ 165,000
$ 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 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.
Note: Round your final answer to the nearest whole dollar amount.
Net present value](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc47c7c53-b4af-4c39-bbef-b208926384d9%2F8f61d76a-ed16-4296-9f92-d009ee5d9947%2Fmt4pm3f_processed.png&w=3840&q=75)
Transcribed Image Text:1
Problem 14-18 (Algo) Net Present Value Analysis [LO14-2]
Print
Oakmont Company has an opportunity to manufacture and sell a new product for a four-year period. The company's discount rate
is 17% and it estimated the following costs and revenues for the new product:
Cost of equipment needed
Working capital needed
Overhaul of the equipment in two years
Salvage value of the equipment in four years.
Annual revenues and costs:
Sales revenues
Variable expenses
Fixed out-of-pocket operating costs
$ 190,000
$ 69,000
$ 6,000
$ 16,500
$ 340,000
$ 165,000
$ 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 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.
Note: Round your final answer to the nearest whole dollar amount.
Net present value
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