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Seahawk Lines is considering the purchase of a new bulk carrier for $5 million to operate for 15 years. Forecasted yearly revenues are $6 million,
Seahawk Lines is considering the purchase of a new bulk carrier for $5
million to operate for 15 years. Forecasted yearly revenues are $6 million,
while operating costs are $4 million, both received at the end of each year.
A major refit that costs $4 million will be required at the end of year 5 and
year 10. After 15 years the ship is expected to be sold for scrap at $0.5
million. If the discount rate is 10%, what is the ship's NPV?
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