How to work out NPV breakeven point? (I HAVE AN EXAM TOMORROW AND REALLY NEED TO UNDERSTAND THIS CONCEPT?

The question

Campbell is considering investing in a up to date boat, the project is risky and the "most predictable bread flows" are detailed below.

Cost of boat lb12,000,000
Annual Sales (30,000 tons at lb250 per ton) lb7,500,000

Anual costs (excluding depreciation)
Crew lb4,000,000
Fuel lb1,000,000
Other lb500,000

Campbell own a discount rate of 10%

Estimate NPV break-even point any graphically or by interpolation in lingo of the mart price.

Answers:
cost is at 12,000,000

sale is at 7,500,000 smaller amount 5,500,000 annual costs, lattice dosh flows are at 2,000,000 per year

assuming the dosh flows are after excise, and discount rate is compounded on a per annum basis

NPV of compunded cashflow after 12 years is in truth 289,134.21

NPV breakeven point is at smaller amount than 12yrs but more than 11 years.

in actual fact on the 12th year you would lone call for almost 1,250,000 web change flow to break even

if this is not clear convey me a ym, in poor health transport you the excel file

self dangerously_inluv
Total costs of Boat = 12,000,000

Total Annual Costs =5,500,000

Sales =7,500,000

Profit = Total annual cost - sale =2,000,000 per year

Break even point = cost of boat \ profit per year

= 6 years

Hope this help remember cost of sale is promising to turn up so this is a simplified tool but terrifically adjectives

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