SOLVE MANUALLY ALL THE PARTS IN THIS QUESTION

The Black Lotus Co. paid $250,000 for a second-hand cruise. This cruise is used for tourism purpose. It will generate $140,000 in revenue and incur $45,000 in general expenses from the first year. Revenue will increase at 3% each year and expenses will increase at 2% each year. The asset is classified as a 3-year MACRS property for depreciation purposes. The expected salvage value is $15,000 at the end of the project life. The firm pays taxes at a rate of 25% and has a MARR of 15%. The project has a 4- year life. A loan is to be taken out for 40% of the initial investment amount. The loan will be repaid annually over the project life in equal payments, at an interest rate of 5%. Calculate the following:

1. Determine the allowed depreciation amounts by using 3-year MACRS (4 points)

2. Calculate the repayment schedule of the loan (4 points)

3. Calculate the Gains (Losses) and tax associated with Asset Disposal (2 points)

4. Create the Income Statement (8 points)

5. Develop a Cash Flow Statement (8 points)

6. Is this project justifiable at a MARR of 15%?

6.1. Calculate the NPW (2 points)

6.2. Calculate IRR (2 points)

6.3. State your conclusions.