12. OpenSeas, Inc., is evaluating the purchase of a new cruise ship. The ship will cost $500...

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12. OpenSeas, Inc., is evaluating the purchase of a new cruise ship. The ship will cost $500 million, and will operate for 20 years. OpenSeas expects annual cash flows from operating the ship to be $70 million and its cost of capital is 12%.

a. Prepare an NPV profile of the purchase.

b. Identify the IRR on the graph.

c. Should OpenSeas proceed with the purchase?

d. How far off could OpenSeas' cost of capital estimate be before your purchase deci- sion would change?

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Fundamentals Of Corporate Finance

ISBN: 9781292018409

3rd Global Edition

Authors: Berk, Peter DeMarzo, Jarrad Harford

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Question Posted: Oct 18, 2024 03:00 PM

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12. OpenSeas, Inc., is evaluating the purchase of a new cruise ship. The ship will cost $500...

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Fundamentals Of Corporate Finance

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