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The following table shows the forecasted operating results for Halong Cruises, Inc., from the purchase of...

The following table shows the forecasted operating results for Halong Cruises, Inc., from the purchase of a new luxury yacht. The company has a cost of capital of 12%.

Year ($ million)
0 1 2 3 4
Investment –$ 345
Operating cash flow $ 177 $ 225 $ 240 $ 255
Working capital $ 78 $ 93 $ 98 $ 83 $ 0
Salvage cash flow $ 70

a. What are the cash flows in each year of operations?

Year 0:

Year 1:

Year 2:

Year 3:

Year 4:

b. What is the net present value of the new yacht?

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Expert Solution

jeff jeffy answered 1 year ago
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