What is the if opportunity cost of capital is eight percent


Problem

Halcyon Lines is considering the purchase of a new bulk carrier for $8.8 million. The forecasted revenues are $5.8 million a year and operating costs are $4.8 million. A major refit costing $2.8 million will be required after both the fifth and tenth years. After 15 years, the ship is expected to be sold for scrap at $2.3 million.

• What is the NPV if the opportunity cost of capital is 8%?

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