Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. reel fast charters, based in the bahamas, runs mul

Reel Fast Charters, based in the Bahamas, runs multi-day fishing charters for wealthy anglers.  They have been very...

70.2K

Verified Solution

Question

Finance

  1. Reel Fast Charters, based in the Bahamas, runs multi-dayfishing charters for wealthy anglers.  They have beenvery successful in their first five years in operation and Brian(the owner) is considering adding a second boat.  A new80’ Viking would cost $5,000,000 with another $1,000,000 needed toupgrade the interior to a level that would attract the wealthyclients they desire.  The boat would be depreciatedstraight-line over 15 years, but would be sold at the end of fiveyears, for an estimated $5,000,000.  The new boat wouldgenerate estimated additional revenue of $2,000,000 per year andwould have associated expenses of $625,000.  Noadditional working capital would be necessary.  Thefirm’s tax rate is 30% and the required rate of return is12%.  Calculate the NPV and IRR.  Should thenew boat be purchased?  

Answer & Explanation Solved by verified expert
3.9 Ratings (617 Votes)
NPV56907646IRR1482The new boat should be purchased since NPV is positiveYearCost    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: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Chemistry
1.2K views

Explain how the pH at which the iron is released from the protein relates to the...

Electrical Engineering
1.2K views

distinction between active and real power? distinction between complex and apparent power? distinction between effective and rms...

General Management
1.2K views

Do some research on Amazon’s Cloud Drive. What is the amount of free storage space? What...

Physics
1.2K views

Consider a stator winding of an alternator with an internal high resistance ground fault The...

Accounting
1.2K views

Alanco, Inc. manufactures a variety of products and is currently manufacturing...

Accounting
1.2K views

Sherrod, Incorporated, reported pretax accounting income of $94 million for 2024. The following information relates...

Accounting
1.2K views

Crane Companys accounts receivable account balance was $124000 at the beginning of the year and...

Accounting
1.2K views

Classifying Costs as Factory Overhead Which of the following items are properly classified...

Accounting
1.2K views

Instructions: Type a price (between $20 and $70 ) into the Market Price box. Then,...

Accounting
1.2K views

The following lots of Commodity Z were available for sale during the year. a. $3,887...

Accounting
1.2K views

3. Let S be a set. Recall that the power set P(S) with the symmetric...

Finance
1.2K views

Which are advantages of focusing on shareholder wealth maximization as the goal of financial management?...