4. 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 equ

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

$

260,000  

  Working capital needed

$

87,000  

  Overhaul of the equipment in two years

$

10,500  

  Salvage value of the equipment in four years

$

13,500  

  Annual revenues and costs:

  Sales revenues

$

430,000  

  Variable expenses

$

210,000  

  Fixed out-of-pocket operating costs

$

88,000  

When the project concludes in four years the working capital will be released for investment elsewhere within the company.

Click here to view Exhibit 13B-1 and Exhibit 13B-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.)