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 $ 275,000
working capital needed $ 86,000
overhaul of the equipment in two years $ 10,000
salvage value of the equipment in four years $ 13,000
annual revenues and costs:
sales revenues $ 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.
calculate the net present value of this investment opportunity.