Oakmont Company has an opportunity to manufacture and sell a new product for a four-year period. Thecompany's discount rate is 17%. After careful study, Oakmont estimated the following costs and revenues forthe new product:Cost of equipment neededWorking capital neededOverhaul of the equipment in two yearsSalvage value of the equipment in four$ 275,000$ 86,000$10,000$ 13,000yearsAnnual revenues and costs:$ 420,000$ 205,000$ 87,000Sales revenuesVariable expensesFixed out-of-pocket operating costsWhen the project concludes in four years the working capital will be released for investment elsewhere withinthe company.Use Excel or a financial calculator to solve.Required:Calculate the net present value of this investment opportunity. (Round to the nearest dollar.)Net present value

Net present value (NPV) refers to the difference between the present value of cash inflows and cash…

Oakmont Company has an opportunity to manufacture and sell a new product for a company's discount rate is 17%. After careful study, Oakmont estimated the followin 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 $ 275,000 $ 86,000 $ 10,000 $ 13,000 Annual revenues and costs: $ 420,000 $ 205,000 Sales revenues Variable expenses

Oakmont Company has an opportunity to manufacture and sell a new product for a company's discount rate is 17%. After careful study, Oakmont estimated the followin 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 $ 275,000 $ 86,000 $ 10,000 $ 13,000 Annual revenues and costs: $ 420,000 $ 205,000 Sales revenues Variable expenses

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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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 $ 90,000 Overhaul of the equipment in two years $ 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 8B-1 and Exhibit 8B-2, to determine the appropriate discount factor(s) using tables. Required: Calculate the net present value of this investment opportunity. (Round discount factor(s) to 3 decimal places.) Net present value
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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 i Overhaul of the equipment in two years Salvage value of the equipment in four years: Annual revenues and costs: Sales revenues $ 130,000 $ 60,000 $ 8,000 $ 12,000 $ 250,000 $ 120,000 $ 70,000 Variable expenses Fixed out-of-pocket operating costs When the project concludes in four years the working capital will be released for investment elsewhere within the company. Click here to view Exhibit 128-1 and Exhibit 128-2, to determine the appropriate discount factor(s) using tables. Net present value Required: Calculate the net present value of this investment opportunity. (Round your final answer to the nearest whole dollar amount.)
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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 Annual revenues and costs: Sales revenues Variable expenses Fixed out-of-pocket operating costs $ 165,000 $ 67,000 $ 10,000 $ 13,000. $ 320,000 $ 155,000 $ 77,000 When the project concludes in four years the working capital will be released for investment elsewhere within the company. Click here to view Exhibit 128-1 and Exhibit 128-2, to determine the appropriate discount factor(s) using tables. (Use the tables to get your discount factors. The linked tables are the same tables as the ones in your course packet. If you calculate discount factors using Excel or a financial calculator, your answer may be different enough due to rounding…
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 Working capital needed $ 170,000 $ 68,000 Overhaul of the equipment in two years $ 12,000 $ 16,000 Salvage value of the equipment in four years Annual revenues and costs: Sales revenues $ 330,000 Variable expenses $ 160,000 $ 78,000 Fixed out-of-pocket operating costs When the project concludes in four years the working capital will be released for investment elsewhere within the company. Click here to view Exhibit 12B-1 and Exhibit 12B-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.)
A heavy equipment rental company uses a high- interest rate of 30% for the rental of a specialty heavy haul dump truck. The net annual profit/loss for this investment is most nearly. Description Amount Total Annual Income $55,000 Capital Cost $80,000 Annual Operating Cost $28,600 Life Span 6 Years O $5,000 -$3,900 O -$4,500 O $7,000
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 two years. Salvage value of the equipment in four years Annual revenues and costs: Sales revenues $ 275,000 $ 86,000 $10,000 $ 13,000 $ 420,000 Variable expenses $ 205,000 Fixed out-of-pocket operating costs $ 87,000 When the project concludes in four years the working capital will be released for investment elsewhere within the company. Click here to view Exhibit 148-1 and Exhibit 148-2. 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.)
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