How
a.For each of the itineraries, calculate the present values of the cash flows using required rates of return of both 12 and 16% using both present value factors and separately using Excel PV function. Assume a 15-year time horizon. Should the company purchase the ship with either or both required rates of return?
(Use Appendix Table B9.2 to arrive at the factor)
	Caribbean/Alaska
	12%	Cash Flow		Factor
	$ 169,000,000		6.8109	=	$ 1,151,036,099
	16%
	$ 169,000,000		5.5755	=	$ 942,252,091
	Caribbean/ Eastern Canada
	12%
	$ 155,000,000		6.8109	=	$ 1,055,683,996
	16%
	$ 155,000,000		5.575456163	=	$ 864,195,705
			Caribbean/Alaska	Caribbean/ Eastern Canada
	Rate		12%	16%	12%	16%
	Number of periods	15	15	15	15
	Cash Flow	$ 169,000,000	$ 169,000,000	$ 155,000,000	$ 155,000,000
	Future value	$0	$0	$0	$0
	Type		0	0	0	0
	PV