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 (this is the discount rate). 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
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