A cruise ship company is considering the purchase of 3 large ships for a total cost of $2,500,000. The company is also considering the purchase of 5 small ships for a total cost of $1,400,000. Both fleets would have estimated useful lives of 20 years. The discount rate for both alternatives is 9% Information regarding these two alternatives is as follows: 3 large ships 5 small ships Annual revenues (accrued) $500,000 $380,000 Annual expenses (accrued) $200,000 $180,000 Annual cash inflows $550,000 $430,000 Annual cash outflows $222,250 $206,350 Estimated salvage value $500,000 $0 The net present value of the purchase of the 3 large ships is: Select one: a. $3,081,097 b. None of the above c. $581,097

Question 8 t The profitability index of the purchase of the 3 large ships is: Select one: a. .46 b. 1.46 c. 3.0 d. None of the above Question 9 Not yet answered Marked out of 2.00 Not flaggedFlag question Question text The annual rate of return for the 3 large ships is: Select one: a. 0% b. 5% c. 12% d. 20%

Question 10 The internal rate of return for the 3 large ships is estimated to be 12%. True or False? Select one: True False

Question 11 a 7 year discounted payback threshold, the company would accept the purchase of the 3 large ships. Select one: True False

Question 12 a 7 year simple payback threshold, the company would accept the purchase of the 5 small ships. True or False? Select one: True False