Based on the information provided below, compute the Net
Present Value of the project (CO 3). A
Net Present Value Template is Attached.
(Hint: Don’t forget to update the discount rate to the amount required
for this project and add your cash flow numbers.)
Royal Dutch Shipping is planning on Investing $1,600,000 to
buy a freighter. Prepare a net present
value analysis based on the assumption that the freighter will be sold for 10%
of its cost at the end of the year 5.
Assume a 10% cost of capital.
Annual operating cash flows for the project are:
Year 1: $380,000
Year 2: $390,000
Year 3: $400,000
Year 4: $410,000
Year 5: $420,000
Prepare a loan amortization schedule based on monthly
payments for the $1,600,000 if Royal Dutch Shipping can pay 10% down on a loan
for $1,600,000 and can get a loan for 6% interest for 10 years (do not include
this in your Net Present Value computations.
This is a separate issue. (CO
3). (Hint:
www.bankrate.com/calculators/mortgages/amortization-calculator.aspx )
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