Answered step by step
Verified Expert Solution
Question
1 Approved Answer
BOOK Net Present Value Method for a Service Company Opulence Corporation has recently placed into service some of the largest cruise ships in the
BOOK Net Present Value Method for a Service Company Opulence Corporation has recently placed into service some of the largest cruise ships in the world. One of these ships, the Bellwether, can hold up to 2,700 passengers and it can cost $540 million to build. Assume the following additional information: There will be 300 cruise days per year operated at a full capacity of 2,700 passengers. The variable expenses per passenger are estimated to be $85 per cruise day. The revenue per passenger is expected to be $425 per cruise day. The fixed expenses for running the ship, other than depreciation, are estimated to be $71,604,000 per year. The ship has a service life of 10 years, with a residual value of $90,000,000 at the end of 10 years. Present Value of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 0.890 0.826 0.797 0.756 0.694 3 0.840 0.751 0.712 0.658 0.579 4 0.792 0.683 0.636 0.572 0.482 5 0.747 0.621 0.567 0.497 0.402 6 0.705 0.564 0.507 0.432 0.335 7 0.665 0.513 0.452 0,376 0.279 8 0.627 0.467 0.404 0.327 0.233 9 0.592) 0.424 0.361 0.284 0.194 10 0.558 0.386 0.322 0.247 0.162 Present Value of an Annuity of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started