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Business, 26.03.2020 23:44 smandylee123

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: Cost of equipment needed $ 260,000Working capital needed $ 87,000Overhaul of the equipment in two years $ 10,500Salvage value of the equipment in four years $ 13,500Annual revenues and costs: Sales revenues $ 430,000Variable expenses $ 210,000Fixed out-of-pocket operating costs $ 88,000When the project concludes in four years the working capital will be released for investment elsewhere within the company. Calculate the net present value of this investment opportunity.

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