OpenSeas, Inc. is evaluating the purchase of a new cruise ship. The ship will cost $501 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 11.7%.

The NPV profile is:

d. How far off could OpenSeas' cost of capital estimate be before your purchase decision would change? (Note: Subtract the discount rate from the approximate IRR.)

The cost of capital estimate can be off by ??%. (Round to one decimal place.)

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.) The NPV for a discount rate of 1 1.5% is $1 million. (Round to one decimal place.) The NPV for a discount rate of 17.0% is $1 million. (Round to one decimal place.)