Yang Ming Marine Transport Corporation is considering the purchase of a new bulk carrier for $8...
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Yang Ming Marine Transport Corporation is considering the purchase of a new bulk carrier for $8 million. The forecasted revenues are $5 million a year and operating costs are $4 million. A major refit costing $2 million will be required after both the fifth and tenth years. After 15 years, the ship is expected to be sold for scrap at $1.5 million, a. What is the NPV if the opportunity cost of capital is 8%? (10 points) b. Should the company accept the purchase of the carrier? (10 points) Yang Ming Marine Transport Corporation is considering the purchase of a new bulk carrier for $8 million. The forecasted revenues are $5 million a year and operating costs are $4 million. A major refit costing $2 million will be required after both the fifth and tenth years. After 15 years, the ship is expected to be sold for scrap at $1.5 million, a. What is the NPV if the opportunity cost of capital is 8%? (10 points) b. Should the company accept the purchase of the carrier? (10 points)
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Answer rating: 100% (QA)
We can break this down into several different cash flows such that the sum of these ... View the full answer
Related Book For
Principles of Corporate Finance
ISBN: 978-0072869460
7th edition
Authors: Richard A. Brealey, Stewart C. Myers
Posted Date:
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