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 $69.4 million (at the end of each year) and its cost of capital is11.6%.

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

b. identify the irr on a graph graph.

The approximate IRR from the graph is ____%

c. Should Open Space go ahead with the purchase?

No, because at the 11.6%, discount rate, the NPV is negative

Yes, because at the 11.6%, discount rate, the NPV is negative

No, because at the 11.6%, discount rate, the NPV is positive

Yes, because at the 11.6%, discount rate, the NPV is positive

d. How far off could OpenSeas' cost of capital estimate be before your purchase decission would change?

The cost of the capital estimate can be off by____% (round to three decimal place)