Argo Airlines, a privately held firm, is looking to buy additional gates at its home airport for $635,000 Argo has $200,000 in the bank but that money may not be spent as it is used to pay salaries, suppliers, and equipment Argo asked its bank for a loan but the bank refused saying that Argo's interest-bearing debt to equity was too high at 3.1 The bank said that Argo needed to lower that ratio below 2.3 in order to get the loan Separately, SkyBlue Airlines has approached Argo to see if Argo will buy it.

Argos CFO hired you to help with the following task:

1. Aside from the purchase price, the gates will require a working capital infusion at purchase of $200,000 Argo estimates the gates will generate cash flows of $355,000/year for the next 7 years After that, the gates will revert back to the airport operator You must calculate the NPV and IRR of the gates..

IMPORTANT: SHOW FORMULAS USED TO CALCULATE

A B D E F G H I 1 Start Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 2 Investment 3 Working Capital 4 Operating Cash Flow 5 Total Cash Flow 6 7 NPV 8 IRR 9. 10 Note: Show all numbers in thousand dollars