Answered step by step
Verified Expert Solution
Question
1 Approved Answer
I am trying to complete cells D49,E49, F49, G49 using the PV formula, the excel is attached in this link and below are screenshots of
I am trying to complete cells D49,E49, F49, G49 using the PV formula, the excel is attached in this link and below are screenshots of it. I need to find the same values that are in G29, G32, G36, G39 https://we.tl/t-jplkvs6E3l
Problem 9-4 Present Value and "What If" Analysis - See Textbook page 9-30 National Cruise Line, Inc. is considering the acquisition of a new ship that will cost 600,000,000. In this regard, the president of the company asked the CFO to analyze cash flows associated with operating the ship under two alternative itineraries: Itinerary 1, Caribbean MnterfAlaska Summer and Itinerary 2, Caribbean WinterfEastem Canada Summer. The CFO estimated the following cash flows, which are expected to apply to each of the next 15 years: OarlbbeanlAlaeka Oarlbbeanl Eastern Canada Net revenue $ 120,000,000 $ 105,000,000 Less: Direct program expenses (25,000,000) (24,000,000) Indirect program expenses (20,000,000) (20,000,000) Non-operating expenses (21,000,000) (21,000,000) Add back depreciation 115,000,000 1 15,000,000 Cash flow per year $ 169,000,000 $ 155,000,000 The estimated cost of the new ship and expected cash flows are: Estimated cost of new ship $ 600,000,000 Estimated period of cash flows in years 15 Required 6. 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) Garlbbeanr'Alaeka " 12% Cash Flow Factor $ 169,000,000 x 6.6109 = $ 1,151,042,100 Ir16% $ 169,000,000 x 5.5755 = $ 942,259,500 Caribbean! Eastern canada I\"12% $ 155,000,000 x 6.6109 = $ 1,055,669,500 I\"16% $ 155,000,000 x 5.5755 = $ 664,202,500 __ll_l____lll__l-_ ._ll_l____l E__l___ ____l_ _I_ a. For each of the itineraries, calculate the present values of the cash flows using required rates of retum 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 39.2 to arrive at the factor) - 1,151,042,100 . l_ l l l_ l_ l_ l l_ l_ l l_ --_l_ --_ l_ --_ 12% 16% 12% 16% l_ - 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 . -- 0 0 0 0 . --_ | | | l_ -- I For the W values In cells D49. E49, F49, (349. use the Microsoft Excel lunctlone. It you need help with the Excel function, See Appendix Aer the Excel videos. Appendix A and the Excel videos show new to use the FORMAT end FINANCIAL tabs In Excel to choose a multitude or Excel functions" . Should the company purchase the ship with either or both required rates of return? Explain. b. The president is uncertain whether a 12 percent ora 16 percent required return is appropriate. Explain whyStep 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