There is a small operating port located on the coast north of Spain. The annual net cash generation was USD 15,000.000 as of the previous year end. The owner will sell the port to the investor for USD 120 million, New cranes will be needed in the 7th year. The cranes will be imported from the UK and the cost is estimated to be 5 million USD, The volume and the net revenue of the port is projected to grow 5% every year for the first 10 years and then to grow 10%. The assets will be transferred back to the owner free of charge at the end of 20™ year. Calculate NPV, assume an interest rate of 10%.
There is a small operating port located on the coast north of Spain. The annual net cash generation was USD 15,000.000 as of the previous year end. The owner will sell the port to the investor for USD 120 million, New cranes will be needed in the 7th year. The cranes will be imported from the UK and the cost is estimated to be 5 million USD, The volume and the net revenue of the port is projected to grow 5% every year for the first 10 years and then to grow 10%. The assets will be transferred back to the owner free of charge at the end of 20™ year. Calculate NPV, assume an interest rate of 10%.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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please show ALL calculation process and explanation. Thank you
Transcribed Image Text:There is a small operating port located on the coast north of Spain. The annual net cash
generation was USD 15,000.000 as of the previous year end. The owner will sell the port to
the investor for USD 120 million. New cranes will be needed in the 7th year. The cranes
will be imported from the UK and the cost is estimated to be 5 million USD, The volume
and the net revenue of the port is projected to grow 5% every year for the first 10 years
and then to grow 10%. The assets will be transferred back to the owner free of charge at
the end of 20™ year. Calculate NPV, assume an interest rate of 10%.
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