Review Problem $17$ #$6($LO$1)$

Huron Charters can purchase a sailboat for $$100,000$ down and a $$60,000$ payment due in one year. The boat would generate additional annual operating profits of $$24,000$ for the first five years and $$15,000$ for the next five years. New sails costing $$16,000$ would be required after five years. After ten years the boat would be replaced; its resale value would be about $$60,000.$

Should Huron purchase the sailboat if its cost of capital is $6\%$ compounded annually?

Huron purchase the boat.