Question: - Below table shows a financial model of a five year old Panamax vessel (USD millions) 4 5 46 -2.6 0.0 2.0 46 27 0.0

- Below table shows a financial model of a five year old Panamax vessel (USD millions) 4 5 46 -2.6 0.0 2.0 46 27 0.0 1.9 Ship investment cash flow for Year Ship purchase price Charter income Operating expense Dry docking special survey Ship operating cash flow Drawdown of debt Loan interest payments Loan repayments Repayment of debt on sale Residual value (ship sale) Not cash flow Discount factor 20.0% PV of cash flows IRR NPV 5 year old Panamax 0 1 2 3 -$27.0 4,6 44 4.6 -24 -2.4 -2.5 0.0 0.0 22 1.7 2.0 13.5 -0.6 -0.6 -0.5 -0.7 -0.7 -0.7 0.0 00 0.0 0.0 -13.5 0.9 0.4 0.8 1.00 1.20 1.44 1.73 -13.50 0.74 0.28 0.47 19.05 0.53 0.0 00 -0.5 0.5 -0.7 -0.7 0.0 -10.1 0.0 37.0 0.8 27.7 2.07 2.49 0.37 11.11 a) Would you invest in this vessel? b) Considering the Internal Rate of Return (IRR) is 19%, would you invest in the vessel, if the discount factor were 19.5 %? c) If the discount factor were 15 %, would you invest in the vessel

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