OpenSeas Inc is evaluating the purchase of a new cruise ship ship will cost 495 million and will operate for 20 years . OpenSeas expects annual cash flows from operating the ship to be 69.2 million and its cost of capital is 11.8%

P 8-12 similar to) Open Seas Inc is evaluating the purchase of a new cruise ship The ship will cost $495 million, and will operate for 20 years. OpenSeas expects annual ca 11.8% a. Prepare an NPV profile of the purchase b. Identify the IRR on the graph. c. Should Open Seas proceed with the purchase? d. How far off could OpenSeas' cost of capital estimate be before your purchase decinion would change? a. Prepare an NPV profile of the purchase To plot the NPV profilo we compute the NPV of the project for various discount rates and plot the curve The NPV for a discount rate of 20% is 5 million (Round to one decimal place)