Question
A factory costs $960,000. You reckon that it will produce an inflow after operating costs of $186,000 a year for 14 years. a. If the
- A factory costs $960,000. You reckon that it will produce an inflow after operating costs of $186,000 a year for 14 years.
a.If the opportunity cost of capital is 10%, what is the net present value of the factory? Net Present Value =
b.What will the factory be worth at the end of six years? Future Value =
2.Halcyon Lines is considering the purchase of a new bulk carrier for $7.1 million. The forecasted revenues are $6.5 million a year and operating costs are $5.5 million. A major refit costing $3.5 million will be required after both the fifth and tenth years. After 15 years, the ship is expected to be sold for scrap at $3.0 million.
a.What is the NPV if the opportunity cost of capital is 11%?
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