OpenSeas, Inc. is evaluating the purchase of a new cruise ship. The ship would cost $505 million, and would operate for 20 years. OpenSeas expects annual cash flows from operating the ship to be $71.5 million (at the end of each year) and its cost of capital is 12.1%.

a. Prepare an NPV profile of the purchase using discount rates of 2%.

b. Estimate the IRR from the graph.

c. Is the purchase attractive based on these estimates?