Calculate the net present value of npv

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A shipowner is interested in buying a new Offshore-Support-Vessel (OSV) for $ 40 million which will be financed by 40% of equity and the rest with a loan from a shipping bank. The financing of the loan will cost shipowner 5%, and the repayment time will be 6 years with annual payments as it will there is also a balloon (pillow) 40%. Historically the cost of equity of the shipowner is at 10%. The shipowner will charter the ship with a fare of $ 27,000 per day which basis of the contract will increase by 2% on an annual basis. Operating costs of the ship will be $ 7,000 per day which will increase by 4% per year. The ship will follow linearly depreciation method at a rate of 4% per annum, and will be sold at the corresponding price at the end of 6 years. Each year consists of 365 days.

Question 1: Calculate the Net Present Value of NPV, and the IRR of the investment.

Reference no: EM132537991

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