OpenSeas, Inc. is evaluating the purchase of a new cruise ship. The ship would cost $ $496$million$,$ and would operate for $20$ years. OpenSeas expects annual cash flows from operating the ship to be $ $69\mathrm{.}6$ million$($at the end of each$$ year$)$ and its cost of capital is $12\mathrm{.}1\%$

a$.$ Prepare an NPV profile of the purchase using discount rates of $2\mathrm{.}0\%,11\mathrm{.}5\%$ and $17\mathrm{.}0\%.$

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.