Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. oakmont company has an opportunity to manufacture

Oakmont Company has an opportunity to manufacture and sell a new product for a four-year...

60.1K

Verified Solution

Question

Accounting

Oakmont Company has an opportunity to manufacture and sell a new product for a four-year period. The companys discount rate is 18%. After careful study, Oakmont estimated the following costs and revenues for the new product:

Cost of equipment needed $ 270,000
Working capital needed $ 90,000
Overhaul of the equipment in year two $ 9,000
Salvage value of the equipment in four years $ 14,500
Annual revenues and costs:
Sales revenues $ 450,000
Variable expenses $ 220,000
Fixed out-of-pocket operating costs $ 90,000

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.)

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Finance
1.2K views

You are a college student and you plan to purchase a new car after you graduate...

Biology
1.2K views

analogous to a phone call to be established befor sending any data O Connection oriented...

Biology
1.2K views

or Use on Fomites isinfection Sanitization Sterilization Reduces or destroys microbial load of an inanimate...

Physics
1.2K views

The image of an object placed in air formed by a convex refracting surface mathongo...

Physics
1.2K views

continues to move undeviated then the strength of the magnetic field induciton B is 14...

Calculus
1.2K views

Find parametric equations for the line segment joining the first point to the second point...

Calculus
1.2K views

Suppose that limf(x) = 10 and lim g(x)=14. Find the following limit.lim [f(x)g (x)]

Accounting
1.2K views

Why do you think " Gross versus Net" became such a big issue in accounting?...

Accounting
1.2K views

this was the question and the teacher has assured me it is...

Accounting
1.2K views

Goodwill is: a) The residual interest in the assets of the entity after...

Accounting
1.2K views

"Operating & Non-Operating Income - Together or Separate? Debate the advantages and disadvantages of...

Finance
1.2K views

Yield to Maturity and Call with Semiannual Payments Thatcher Corporation's bonds will mature in 16...