2.2 2.0 5- Below table shows a financial model of a five year old Panamax vessel (USD millions) Ship investment cash-flow for 5 year old Panamax Year 0 1 2 3 4 5 Ship purchase price -$27.0 Charter income 4.6 4.4 4.6 4.6 4.6 Operating expense -2.4 -2.4 -2.5 -2.6 -2.7 Dry docking/special survey 0.0 -0.3 0.0 0.0 0.0 Ship operating cash flow 1.7 2.0 1.9 Drawdown of debt 13.5 Loan interest payments -0.6 -0.6 -0.5 -0.5 -0.5 Loan repayments -0.7 -0.7 -0.7 -0.7 -0.7 Repayment of debt on sale 0.0 0.0 0.0 0.0 -10.1 Residual value (ship sale) 0.0 0.0 0.0 0.0 37.0 Net cash-flow -13.5 0.9 0.4 0.8 0.8 27.7 Discount factor 20.0% 1.00 1.20 1.44 1.73 2.07 2.49 PV of cash flows -13.50 0.74 0.28 0.47 0.37 11.11 IRR 19.0% NPV -0.53 w W a) Would you invest in this vessel? (5 points) b) Considering the Internal Rate of Return (IRR) is 19 %, would you invest in the vessel, if the discount factor were 19.5 %? (5 points). c) If the discount factor were 15 %, would you invest in the vessel? (5 points)