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%?