OpenSeas, Inc. is evaluating the purchase of a new cruise ship. The ship will cost $503 million and will operate for 20 years. Open Seas expects annual cash flows from operating the ship to be $71.3 million and its cost of capital is 12.4%. a. Prepare an NPV profile of the purchase. b. Identify the IRR on the graph. c. Should Open Seas go ahead with the purchase? d. How far off could Open Seas's cost of capital estimate be before your purchase decision would change? ..... a. Prepare an NPV profile of the purchase. To plot the NPV profile, we compute the NPV of the project for various discount rates and plot the curve. The NPV for a discount rate of 2.0% is $ million. (Round to one decimal place.) Nex Orchid Biotech Company is evaluating several different development projects for experimental drugs. Although the cash flows are difficult to fd y has come up with the following estimates of the initial capital requirements and NPVs for the projects. Given a wide variety of staffing needs, the company has also estimated the number of research scientists required for each development project. (All cost values are given in millions of dollars.) NPV ($) 10.1 Initial Capital Number of Research Project Number ($) Scientists 10 2 II 15 3 III 15 4 IV 20 3 V 30 12 19.0 22.0 25.0 60.2 a. Suppose that Orchid has a total capital budget of $60 million. How should it prioritize these projects? b. Suppose that Orchid currently has 12 research scientists and does not anticipate being able to hire more in the near future. How should Orchid prioritize these projects? a. Suppose that Orchid has a total capital budget of $60 million. How should it prioritize these projects? The profitability index for Project I is (Round to two decimal places.)