Question
OpenSeas, Inc. is evaluating the purchase of a new cruise ship. The ship would cost $500 million, but would operate for 20 years. OpenSeas expects
OpenSeas, Inc. is evaluating the purchase of a new cruise ship. The ship would cost
$500 million, but would operate for 20 years. OpenSeas expects annual cash flows from operating the ship to be
$70.0 million (at the end of each year) and its cost of capital is 12.0%
a. Prepare an NPV profile of the purchase using discount rates of 2.0%, 11.5% and 17.0%.
b. Identify the IRR on a graph.
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Personal Finance
Authors: Jack R Kapoor, Glencoe McGraw Hill, Les R Dlabay, Robert J Hughes
1st Edition
0078698006, 9780078698002
