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Case Problem: A crude oil transport company is contemplating on the investment of purchasing a new oil tanker that costs 50 million. It is
Case Problem: A crude oil transport company is contemplating on the investment of purchasing a new oil tanker that costs 50 million. It is estimated that the tanker will bring in an annual revenue of 20 million for ten years after which it will have a salvage value of 2 million. The cost for operation and maintenance is estimated to be 1 million per year. Taxes and insurance will cost 5% of the first cost each year. The company estimated its MARR to be 25% and its WACC to be 20%.
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