Caribbean cruise line has purchased new cruise ship

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Reference no: EM131576893

A Caribbean cruise line has purchased a new cruise ship for $35 million and expects to realize a net revenue of $210,000 each year for the next 10 yeears. The estimated salvage value of the ship at the end of its useful life of 10 years is $134,000. Assume an effective federal tax rate of 40%, a state income tax rate of 7% per year, and an after-tax inflation-free MARR of 8% per year. Calculate the actual dollar present worth of ATCF if straight-line depreciation is used and the average rate of inflation is 4%.

Reference no: EM131576893

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