Market News (data from 4 May 2020 real life news was changed for the exam case). SOLVE IN EXCEL!: Tallinna Sadam subsidiary TS Laevad and Road Administration signed an agreement for additional trips and acquiring new ferry for Virtsu-Kuivastu line In connection with the expected increase in demand on the Virtsu-Kuivastu and Rohukla-Heltermaa ferry lines in the following years, O TS Laevad, a subsidiary of AS Tallinna Sadam, and the Estonian Road Administration signed an annex to the additional public passenger service agreement with the aim of performing at least 500 additional voyages on the Virtsu-Kuivastu route each year in the period 01.06.2020-30.09.2028. Since it is not possible to make such an additional number of additional voyages with the existing fleet during the peak season, it is necessary to acquire a new additional ferry for the route. According to the agreement, the Road Administration will order additional voyages in 2022- 2024 similarly to the summer periods of previous years - additional voyages will be performed by M/S Regula or another suitable ferry available, on condition that the spare vessel can be temporarily provided during the high season. The agreement sets the goal that from 01.06.2024 until 30.09.2028 additional voyages will be made by a new-built ferry, the fee and other conditions of which will be agreed after TS Laevad conducts a tender for the construction of the ship and the acquisition cost and terms become clear. The Road Administration has the option to refuse to order additional voyages if the parties do not reach an agreement on the service charges, for example if the possible acquisition cost of a new vessel turns out to be too high. According to the states wishes, the vessel must be environmentally friendly, have an ice class and an on-board shop, and can also be used on the Rohukla-Heltermaa line with low sea level. The total length of a suitable ferry is up to 114m, draft about 3.5m, capacity approximately 300 passengers and 110-120 passenger cars or 8 semi-trailer trucks with a length of 19m. The parameters of the vessel to be acquired have also been negotiated with local communities. TS Laevad plans to organize a tender for the construction of the additional ferry in the second half of 2022 after the completion of the design work. According to the ferry services agreement with the Estonian Road Administration signed on 11.12.2014, TS Laevad provides ferry services on the Rohukla-Heltermaa and Virtsu-Kuivastu ferry lines until 30.09.2028. TS Laevad also has the necessary competence in the specialities of operating shipping lines and up-to-date experience in acquiring new ferries.

Other information: - All cash flows calculated as full year to simplify NPV calculation. Also for the year 2028 when actual contact ends 30.09.28. - T0 is year 2022 when the first payment is made - Road Administration pays fee per calendar day. Starting on 01.06.2024 until 30.09.2028 - Cost of the ferry: 40mio euros - Payment schedule: 2022: 30% 2023: 45% 2024: 25% - Residual value: 32 mio euros - Money to purchase the ferry comes from: 55% borrowed from bank and 45% from equity - Cost to borrow is 3% - ROE is 15% - Road Administration pays 15 000 euros per day

Running cost are not given here, so you can ignore those.

Your task: Is the 15 000 euros per day sufficient or daily rate has to be some other amount?