OpenSeas, Inc. is evaluating the purchase of a new cruise ship. The ship would cost $ 502 million, and would operate for 20 years. OpenSeas expects annual cash flows from operating the ship to be $ 71.8 million (at the end of each year) and its cost of capital is 12.3 %a. Prepare an NPV profile of the purchase using discount rates of 2.0 % , 11.5 % and 17.0 % . b. Identify the IRR (to the nearest 1%) on a graph. c. Is the purchase attractive based on these estimates? d. How far off could OpenSeas' cost of capital be (to the nearest 1%) before your purchase decision would change? Note: Subtract the discount rate from the actual IRR. Use Excel to compute the actual IRR.

a. Prepare an NPV profile of the purchase using discount rates of 2.0%,11.5% and 17.0%. The NPV for a discount rates of 2.0% is $ million. (Round to the nearest integer.) The NPV for a discount rates of 11.5% is $ million. (Round to the nearest integer.) The NPV for a discount rates of 17.0% is $ million. (Round to the nearest integer.) b. Identify the IRR (to the nearest 1% ) on a graph. The approximate IRR from the graph is \%. (Round to the nearest integer.) c. Is the purchase attractive based on these estimates? (Select the best choice below.) A. Yes, because at a 12.3% discount rate, the NPV is positive. B. No, because at a 12.3% discount rate, the NPV is negative. C. Yes, because at a 12.3% discount rate, the NPV is negative. D. No, because at a 12.3% discount rate, the NPV is positive. d. How far off could OpenSeas' cost of capital be (to the nearest 1\%) before your purchase decision would change? The cost of capital estimate can be off by %. (Round to three decimal places.)