The management of Heavyload Lines, is considering the purchase of a new petrol carrier for $10 million. The forecast revenues are $5 m a year and operating costs are $3m (depreciation excluded).

The ship can be depreciated on 10 years. After 10 years the ship will be sold at $2m. The corporate tax rate of the company is 35% and its cost of capital is 8%. What is the NPV of this project?

Answer rating: 100% (QA)

Cash outflow cost of machine 10M Cash inflow Description Amou... View the full answer