Based on the information provided below, compute the Net Present Value (NPV) and Internal Rate of
Return (IRR) 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 and internal rate of return analysis based on the assumption that the freighter will be sold (salvaged) 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: $380,000Year 2: $390,000Year 3: $400,000Year 4: $410,000Year 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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