SW \#1 Finals PROBLEM 1 Superior Shipping Line is planning to purchase a new Ship Costing 300 million pesos. The following are the financial data: - Ship capacity 2,000 passengers - Estimated useful life of 10 year - Salvage value of 40 million pesos - Voyage year is 300 days per year - 80% occupancy rate for the entire ship - Revenue - Php 250 per passenger per day - Variable cost - Php 100 per passenger per day - Annual fix cost of this capital investment project is 20 million per year (exclusive of depreciation) - Tax Rate applicable, 32% Compute for: 1) Net Income after tax 2) Net cash flow 3) Payback period 4) Accept or Reject? Assuming that expected payback period for this type of investment is 6.5 years 5) Accounting rate of return based on initial investment 6) Accounting rate of return based on average investment 7) Accept or reject? Assuming that management is expecting ARR based on initial investment of at least 6.2%