1. Orca Company is deciding whether to purchase a new, much larger boat for its Tours Division which provides tours out of La Push, Washington. The boat will last for 10 years. Orca Company uses Net Present Value to determine whether to purchase new assets and provides you with the information below:

Cost of Boat	$160,000
Salvage Value (after 10-year useful life)	$16,000
Working Capital Needed Now	$35,000
Annual Increase in Revenue	$52,000
Pre-Scheduled maintenance after Year 3	$32,000
Pre-Scheduled maintenance after Year 6	$32,000
Company Cost of Capital	15%
Income Tax Rate	25%

At the end of its life, the boat will be sold for its salvage value of $16,000 and at the end of the useful life of the boat the Working Capital will be released for use by Orca Company elsewhere.

Requirement(s):

Calculate the Net Present Value, when considering tax effects, and determine if Orca Company should purchase the new tour boat.