Oakmont Company has an opportunity to manufacture and sell a new product for a four-year period....
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 | $ | 220,000 |
| Working capital needed | $ | 81,000 |
| Overhaul of the equipment in year two | $ | 7,500 |
| Salvage value of the equipment in four years | $ | 10,500 |
| Annual revenues and costs: | ||
| Sales revenues | $ | 370,000 |
| Variable expenses | $ | 180,000 |
| Fixed out-of-pocket operating costs | $ | 82,000 |
When the project concludes in four years the working capital will be released for investment elsewhere within the company.
Click here to view Exhibit 7B-1 and Exhibit 7B-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.)
Homework Answers
| Net present Value of investment | $ 31,334.97 | |
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Oakmont Company has an opportunity to manufacture and sell a new
product for a four-year period....
Oakmont Company has an opportunity to manufacture and sell a new product for a four-year period. ...
Oakmont Company has an opportunity to manufacture and sell a new product for a four-year period. The company’s discount rate is 16%. After careful study, Oakmont estimated the following costs and revenues for the new product: Cost of equipment needed $ 250,000 Working capital needed $ 82,000 Overhaul of the equipment in two years $ 8,000 Salvage value of the equipment in four years $ 11,000 Annual revenues and costs: Sales revenues $ 380,000 Variable expenses $ 185,000 Fixed out-of-pocket...
Oakmont Company has an opportunity to manufacture and sell a new product for a four-year period....
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:
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 $ 165,000 $ 67,000 $ 10,000 $ 13,000...
Oakmont Company has an opportunity to manufacture and sell a new product for a four-year period....
Oakmont Company has an opportunity to manufacture and sell a new product for a four-year period. The company's discount rate is 15%. After careful study, Oakmont 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 $130,000 $60,000 $8,000 $12,000 Annual revenues and costs: Sales revenues $250,000 $120,000 $70,000 Variable expenses Fixed out-of-pocket operating costs When the project...
Oakmont Company has an opportunity to manufacture and sell a new product for a four-year period....
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 Working capital needed Overhaul of the equipment in two years Salvage value of the equipment in four years $ 270,000 $ 85,000 $ 8,000 $ 12,500 Annual revenues and costs: Sales revenues Variable expenses Fixed out-of-pocket operating costs $410,000 $...
Oakmont Company has an opportunity to manufacture and sell a new product for a four-year period....
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 $ 270,000 Working capital needed $ 85,000 Overhaul of the equipment in year two $ 8,000 Salvage value of the equipment in four years $ 12,500 Annual revenues and costs: Sales revenues $ 410,000 Variable expenses $ 200,000 Fixed out-of-pocket...
Oakmont Company has an opportunity to manufacture and sell a new product for a four-year period....
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 Working capital needed Overhaul of the equipment in year two Salvage value of the equipment in four years $ 275,000 $ 86,000 $ 10,000 $ 13,000 Annual revenues and costs: Sales revenues Variable expenses Fixed out-of-pocket operating costs $ 420,000...
Oakmont Company has an opportunity to manufacture and sell a new product for a four-year period....
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 Working capital needed Overhaul of the equipment in year two Salvage value of the equipment in four years $ 265,000 $ 88,000 $ 8.000 $ 14,000 Annual revenues and costs: Sales revenues Variable expenses Fixed out-of-pocket operating costs $ 440,...
Oakmont Company has an opportunity to manufacture and sell a new product for a four-year period....
Oakmont Company has an opportunity to manufacture and sell a new product for a four-year period. The company's discount rate is 15%. After careful study, Oakmont estimated the following costs and revenues for the new product: $ 145,000 63,000 9,500 13,500 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: $ 280,000 $ 135,000 $ 73,000 Sales revenues Variable expenses Fixed out-of-pocket operating...
Oakmont Company has an opportunity to manufacture and sell a new product for a four-year period....
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 year two $ 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...
kmont Company has an opportunity to manufacture and sell a new product for a four-year period....
kmont 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 $ 225,000 Working capital needed $ 80,000 Overhaul of the equipment in year two $ 7,000 Salvage value of the equipment in four years $ 10,000 Annual revenues and costs: Sales revenues $ 360,000 Variable expenses $ 175,000 Fixed out-of-pocket...
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:
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 $ 165,000 $ 67,000 $ 10,000 $ 13,000...
Oakmont Company has an opportunity to manufacture and sell a new product for a four-year period. The company's discount rate is 15%. After careful study, Oakmont 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 $130,000 $60,000 $8,000 $12,000 Annual revenues and costs: Sales revenues $250,000 $120,000 $70,000 Variable expenses Fixed out-of-pocket operating costs When the project...
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 Working capital needed Overhaul of the equipment in two years Salvage value of the equipment in four years $ 270,000 $ 85,000 $ 8,000 $ 12,500 Annual revenues and costs: Sales revenues Variable expenses Fixed out-of-pocket operating costs $410,000 $...
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 Working capital needed Overhaul of the equipment in year two Salvage value of the equipment in four years $ 275,000 $ 86,000 $ 10,000 $ 13,000 Annual revenues and costs: Sales revenues Variable expenses Fixed out-of-pocket operating costs $ 420,000...
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 Working capital needed Overhaul of the equipment in year two Salvage value of the equipment in four years $ 265,000 $ 88,000 $ 8.000 $ 14,000 Annual revenues and costs: Sales revenues Variable expenses Fixed out-of-pocket operating costs $ 440,...
Oakmont Company has an opportunity to manufacture and sell a new product for a four-year period. The company's discount rate is 15%. After careful study, Oakmont estimated the following costs and revenues for the new product: $ 145,000 63,000 9,500 13,500 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: $ 280,000 $ 135,000 $ 73,000 Sales revenues Variable expenses Fixed out-of-pocket operating...
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