Carnival Corporation has recently placed into service some of the largest cruise ships in the world. One of these ships, the Carnival Breeze, can hold up to 3,600 passengers, and it can cost $800 million to build. Assume the following additional information:
- There will be 330 cruise days per year operated at a full capacity of 3,600 passengers.
- The variable expenses per passenger are estimated to be $110 per cruise day.
- The revenue per passenger is expected to be $250 per cruise day.
- The fixed expenses for running the ship, other than depreciation, are estimated to be $20,000,000 per year.
- The ship has a service life of 10 years, with a residual value of $200,000,000 at the end of 10 years.
D I p MyColleclionaStation57Pandoi xj a: CengageNOWleOnline teachir X LI; course heroiBing X I Course Hero X I + X 6 G E! https://v2.cengagenow.con'i/i|rn/takeAssignment/takeAsslgnmentMalh.do?invoker:SnakeAssignmentSessionLocator:&inprogress:false {'5 41 0 Ch. 26, Quiz B ('l Net Present Value Method for a Service Company Carnival Corporation has recently placed into service some of the largest cruise ships in the world. One of these ships, the Carnival Breeze, can hold up to 3,600 passengers, and it can cost $800 million to build. Assume the following additional information: - There will be 330 cruise days per year operated at a full capacity of 3,600 passengers. - The variable expenses per passenger are estimated to be $110 per cruise day. - The revenue per passenger is expected to be $250 per cruise day. - The xed expenses for running the ship, other than depreciation, are estimated to be $20,000,000 per year. 0 The ship has a service life of 10 years, with a residual value of $200,000,000 at the end of 10 years. Present Value of $1 at Compound Interest Present Value of an Annuity of $1 at Compound Interest Year 6% 10% 12% 15% 20% Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 1 0.943 0.909 0.893 0.870 0.833 2 0.890 0.826 0.797 0.756 0.694 2 1.833 1.736 1.690 1.626 1.528 e 3 0.840 0.751 0.712 0.658 0.579 3 2.673 2.487 2.402 2.283 2.106 4 0.792 0.683 0.636 0.572 0.482 4 3.465 3.170 3.037 2.855 2.589 5 0.747 0.621 0.557 0.497 0.402 5 4.212 3.791 3.605 3.352 2.991 6 0.705 0.564 0.507 0.432 0.335 6 4.917 4.355 4.111 3.784 3.326 7 0.665 0.513 0.452 0.376 0.279 7 5.582 4.868 4.564 4.160 3.605 8 0.627 0.467 0.404 0.327 0.233 8 6.210 5.335 4.968 4.487 3.837 9 0.592 0.424 0.361 0.284 0.194 9 6.802 5.759 5.328 4.772 4.031 10 0.558 0.386 0.322 0.247 0.162 10 7.360 6.145 5.650 5.019 4.192 3. Determine the annual net cash flow from operating the cruise ship. 7:23 'M 5: ,0 Type here to search ' . , ' J \\ $3 $19,203 My Collection - Stations - Pando X CengageNOWv2 | Online teachin X course hero - Bing X Course Hero X + X C @ https://v2.cengagenow.com/ilrn/takeAssignment/takeAssignmentMain.do?invoker=&takeAssignmentSessionLocator=&inprogress=false to . . Ch. 26, Quiz B 4 0.792 0.683 0.636 0.572 0.482 4 3.465 3.170 3.037 2.855 2.589 ? 0.747 0.621 0.567 0.497 0.402 5 4.212 3.791 3.605 3.352 2.991 0.705 0.564 0.507 0.432 0.335 6 4.917 4.355 4.111 3.784 3.326 V 0.665 0.513 0.452 0.376 0.279 7 5.582 4.868 4.564 4.160 3.605 Co 0.627 0.467 0.404 0.327 0.233 Co 6.210 5.335 4.968 4.487 3.837 0.592 0.424 0.361 0.284 0.194 9 6.802 5.759 5.328 4.772 4.031 10 0.558 0.386 0.322 0.247 0.162 10 7.360 6.145 5.650 5.019 4.192 a. Determine the annual net cash flow from operating the cruise ship. Revenues Variable expenses Fixed expenses Annual net cash flow $ b. Determine the net present value of this investment, assuming a 12% minimum rate of return. Use the present value tables provided above. If required, round to the nearest dollar. Present value of annual net cash flows Present value of residual value Total present value OneDrive X Amount to be invested Screenshot saved Net present value $ The screenshot was added to your OneDrive. 7:24 PM H Type here to search O X 91OF 8/9/2021
