Question

Oakmont Company has an opportunity to manufacture and sell a new product for a four-year period. The companys discount rate

EXHIBIT 7B-1 Present Value of $1; -1 Periods 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 16% 17% 18% 19% 20% 21% 22% 23% 24% 25EXHIBIT 7B-2 Present Value of an annuity of $1 in Arrears; ? [1 - atos] 9 Periods 4% 5% 6% 7% 8% 9% 10% 11% 12% 13% 14% 15% 1

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Answer #1

Calculate net present value:

Net present value = Present value of cash inflow-Present value of cash outflow

Present value of cash inflow = (132000*2.69+100500*.516) = 406938

Net present value = 406938-354539

Net present value = 52399

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