Question
(calculate step by step) OpenSeas, Inc. is evaluating the purchase of a new cruise ship. The ship would cost $500 million and would operate for
(calculate step by step)
OpenSeas, Inc. is evaluating the purchase of a new cruise ship. The ship would cost $500 million and would operate for 20 years. OpenSeas expects annual cash flows from operating the ship to be $70 million (at the end of each year) and its cost of capital is 12%.
Show your calculations and answer the following questions
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Calculate the NPV of the project if the cost of capital is 12%
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Is the purchase an attractive investment?
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Would your answer change if the cost of capital was 13%?
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Fundamentals of Financial Management
Authors: Eugene F. Brigham, Joel F. Houston
Concise 6th Edition
324664559, 978-0324664553
