After successfully earning a MBA, Lincoln alumni decide to form their own
cruise ship company based out of San Francisco. Lincoln Alumni cruises offers luxury trips along the Pacific Coast
and to the Hawaiian Islands. They are debating what to do with their existing ship, S.S.
Mission Bay which was built 15 years ago for $90 M and is now fully depreciated. To replace the Mission Bay
would cost $180M and its current market value is $150M. Lincoln Alumni Cruises' cost of capital is 15%.
Lincoln Alumni, dusting off some accounting materials, were able to determine the operating costs
for a two-week cruise to Alaska, which would be a change from a three week cruise from travelling down to
Guatemala. Here are their estimates (based on 2,000 passengers per cruise and 25 cruises per year):

PER CRUISE
	Variable Costs	Fixed Costs
Labor	750,000	150,000
Food	750,000	75,000
Fuel		650,000
Port fees and services		125,000
Marketing, ads, promotion		350,000
Supplies	500,000	150,000
Totals	2,000,000	1,500,000

Guatemala. Here are their estimates (based on 2,000 passengers per cruise and 25 cruises per year): PER CRUISE Variable Costs Fixed Costs Labor 750,000 150,000 Food 750,000 75,000 Fuel 650,000 Port fees and services 125,000 Marketing, ads, promotion 350,000 Supplies 500,000 150,000 Totals 2,000,000 1,500,000 a. Assuming that the two-week Alaskan cruise will be priced at $2,000 per passenger, please calculate the break-even number of passengers per cruise based on the data above. b. What do the Lincoln Alumni need to consider beyond these estimates, and if they included this consideration, what would happen to the break-even point? Would there be an issue if the max capacity of the ship was 2000 passengers? HINT: Please calculate the OPPORTUNITY COST and compare against its capacity.