Should Ms Linn of Ocean Carrier purchase the capesize carrier? Assume that it is going to be sold for scrap after 15 years. The answer is NO because the NVP is negative. My question is how do you calculate this in excel? I need step by step instructions to place this in excel.

NPV with taxation impact on 15 years operating = - $6,984,937

NPV without taxation impact on 15 years operating = - $1,252,916

• Capesize carrier $39M
• Three-year time charter starting in 2003 at a rate of $20,000 per day with an annual escalation of $200 per day
• Expected inflation rate is 3%
• Scrap valued at $5M at end of year 15
• Operating cost expected to be $4,000 per day and to increase at a rate 1% above inflation
• Maintenance days: Initial 8 days, 12 days after 5 years and 16 days after 10 years annually
• Capital Expenditure in 2007: $300,000 and 2012: $350,000
• Estimated scrap value at end of fifteen year is $5,000,000
• Daily Hire Rate Adjustment

 

 

Answer rating: 100% (QA)

To calculate the NPV with and without taxation impact in Excel follow these stepbystep instructions ... View the full answer