Assignment # 3A

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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 with a 10% discount rate based on the assumption that the freighter will be sold for 10% of it's cost at the end of the year 5.   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

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 $1,100,000 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). This also assumes they are paying $500,000 cash along with the $1,100,000 loan. (Hint: www.bankrate.com/calculators/mortgages/amortization-calculator.aspx )

There is an NPV example attached........