Argo Airlines is looking to buy some gates at a West Coast airport. The key financial variables are below.

Note that the gates revert back to the airport at the end of year 15. Note that any losses trigger tax benefits.

Purchase Price $22M

Yearly Revenue $11M

Operating Costs 43% of revenue

Discount Rate 6.6%

Gate Renovation (Fit-out Costs) $3M (in year 5 and 10)

Revenue Inflator 1.2%

Tax Rate 21%

What are the NPV and IRR of the gates? Should Argo invest in them? Why or why not?

AutoSave O OFF A A 9 9 . C ... MGMT332_Excel_Template_Final_Exam (1) Home Insert Draw Page Layout Formulas Data Review View ? Tell me Share Comments Times New Roman 2b Wrap Text v Custom LG Copy 60% - Accent3 60% - Accent4 60% - Accents Accents Accent6 AutoSum A Paste Format BI UV MVA Merge & Center v $ ~ % " Conditional Format Accent2 Accent3 Accent4 Currency [0] Percent Fill ormatting as Table Insert Delete Format Analyze Clear Sort & Data Open recovered workbooks? Your recent changes were saved. Do you want to continue working where you left off? Yes No B2 B G H M N o Q Z AA AB AC AD AG AH AI AJ AK AL AM Argo Airlines AN AO Purchase price Fit-out costs Yearly revenue Revenue inflator Operating costs (% of revenue) Discount rate Tax rate Years Start 2 Investment 4 8 2 10 11 12 13 14 15 Revenues 4 Expenses Income before tax 6 Taxes Net income after tax 18 NPV 19 IRR Text answer here. Prob. 1 Prob. 2 Prob. 3 Prob. 4 v. MAR 2021 + Ready