Problem

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 $ 150,000
Working capital needed $ 64,000
Overhaul of the equipment in two years $ 10,000
Salvage value of the equipment in four years $ 14,000
Annual revenues and costs:
Sales revenues $ 290,000
Variable expenses $ 140,000
Fixed out-of-pocket operating costs $ 74,000

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

Required:

Calculate the net present value of this investment opportunity.