Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. halcyon lines is considering the purchase of a new

Halcyon Lines is considering the purchase of a new bulk carrier for $8.7 million. The forecasted...

80.2K

Verified Solution

Question

Finance

Halcyon Lines is considering the purchase of a new bulk carrierfor $8.7 million. The forecasted revenues are $5.9 million a yearand operating costs are $4.9 million. A major refit costing $2.9million will be required after both the fifth and tenth years.After 15 years, the ship is expected to be sold for scrap at $2.4million. a.

A. What is the NPV if the opportunity cost of capital is 9%?(Negative amount should be indicated by a minus sign. Do not roundintermediate calculations. Round your answer to the nearest wholedollar amount.) Net present value $ b. Halcyon could finance theship by borrowing the entire investment at an interest rate of4.5%. Will this borrowing opportunity affect your calculation ofNPV?

Answer & Explanation Solved by verified expert
4.5 Ratings (665 Votes)
The NPV of the investment    See Answer
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Zin AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

Enzyme denotes the exact conformational match an enzyme and its substrate must have to interact....

Biology
Q

17 A collar of spring constant 500 Nm 1 If collar is displaced from equilibrium...

Physics
Q

A goblet contains 2 red marbles 6 green marbles and 4 blue marbles If we...

Algebra
Q

Use Apple's financial statements in Appendix A to answer the following. Required: 1. Using fiscal...

Accounting
Q

plz this one and i will be thanks full also i cant wright any commont...

Accounting
Q

Journalize each of the following transactions assuming a perpetual inventory system. April 5 Sold...

Accounting
Q

accounting 4300 Required information [The following information applies to the...

Accounting
Q

DESCRIBE THE MANAGERIALS ACCOUNTANTS ROLE IN BUSINESS PLANNING, CONTROL AND DECISION MAKING

Accounting
Q

Typically, a profitable company that pays relatively high dividends: A. will reinvest more profit which...

Accounting
Q

Offshore Drilling Products, Inc., imposes a payback cutoff of three years for its international investment...

Finance
Q

Nast Inc. is considering Projects S and L, whose cash flows are shown below. These...

Finance
Q

Please help me to fill out the blanks, I will make sure to upvote. Thank...

Accounting