Net Present Value Method Opulence Corporation operates several large cruise ships. One of these ships, the Bellwether, can hold up to 3,700 passengers and cost $740 million to build. Assume the following additional information: There will be 300 cruise days per year operated at a full capacity of 3,700 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 $98,124,000 per year The ship has a service life of 10 years, with a residual value of $120,000,000 at the end of 10 years. Present Value of $1 at Compound Present Value of an Annuity of $1 at Interest Compound Interest 20% Year 6% 10% 12% 15% 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 1.626 1.528 2 0.890 0.826 0.797 0.756 0.694 2 1.833 1.736 1.690 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 0.747 0.621 0.567 0.497 0.402 4.212 3.791 3.605 3.352 2.991 5 0.705 0.564 0.507 0.432 0.335 6 4.917 4.355 4.111 3.784 3.326 6 0.665 0.513 0.452 0.376 0.279 7 5.582 4.868 4.564 4.160 3.605 0.627 0.467 0.404 0.327 0.233 6.210 5.335 4.968 4.487 3.837 0.284 0.194 9 6.802 5.759 5.328 4.772 4.031 9 0.592 0.424 0.361 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. $ 471,750,0 Revenues Variable expenses 94,350,00 98,124,00 V Fixed expenses 279,276,0 v Annual net cash flow b. Determine the net present value of th is investment, assuming a 6% minimum rate of return. Use the present value tables provided above. If required, round to the nearest whole dollar. Present value of annual net cash X flows Present value of residual value $ Total present value Amount to be invested $ Net present value