OpenSeas, Inc. is evaluating the purchase of a new cruise ship. The ship would cost $504 million, but would operate for 20 years. OpenSeas expects annual cash flows from operating the ship to be $68.6 million(at the end of eachyear) and its cost of capital is 11.3%

a. Write an NPV profile of the purchase using discount rates of 2.0%, 11.5% and 17.0%.

b. Identify the IRR on a graph.

c. Is the purchase attractive based on theseestimates?

d. How far off couldOpenSeas' cost of capital estimate be before your purchase decision wouldchange? (NOTE: Subtract the discount rate from the actual IRR. Use Excel to compute the actualIRR.)