OpenSeas, Inc. is evaluating the purchase of a new cruise ship. The ship will cost $504 million and will operate for 20 years. OpenSeas expects annual cash flows from operating the ship to be $69.4 million and its cost of capital is 11.8%. a. Prepare an NPV profile of the purchase. b. Identify the IRR on the graph. c. Should OpenSeas go ahead with the purchase? d. How far off could OpenSeas'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.)

OpenSeas, Inc, is evaluating the purchase of a new cruse ship. The ship will cost $504 milion and will operate for 20 years. OpenSess expects annual cash flows from operating the ship to be $69.4 milion and its cost of capital is 11.8% a. Prepare an NPV profle of the purchase b. Identily the IRR on the graph. c. Should Openseas go ahead with the purchase? d. How far of could OpenSeas's cost of captal estimate be before your purchase decision would change? a. Prepare an NPV profie of the purchase To plot the NPV profile, we compute the NPV of the project for vanous discount rates and plot the curve. The NPV for a discount rate of 20% is 5 milion. (Round to one decimal place.)