One company would like to spend $80 million to build a new ship of 30,000 dwt to be used for time chartering. It is expected that the tc rate will be $8000/day. The total commission is 5% of the total revenues. the fixed costs of the ship operation are $11 million, among which the depreciation is $3.8 million.

Suppose the ship will run for 11 months per year, and it will be used for 20 years. The residual ship value will be $4 million, the benchmark rate of return i=15%.

How much is the NPV for this project? How long is the investment payback period?

(A/P, 15%, 20)= 0.1598 (P/F, 15%, 20)=0.0611

(A/F, 15%, 20)= 0.0098 (P/A, 15%, 20)=6.2593

Answer rating: 100% (QA)

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