Opulence Corporation has recently placed into service some of the largest cruise ships in the world. One of these ships, the Bellwether, can hold up to 3.400 passengers and it can cost $680 million to build. Assume the following additional information: There will be 300 cruise days per year operated at a full capacity of 3.400 passengers The variable expenses per passenger are estimated to be $90 per cruise day. The revenue per passenger is expected to be $450 per cruise day. The fixed expenses for running the ship, other than depreciation, are estimated to be $95,472,000 per year. The ship has a service life of 10 years, with a residual value of $110,000,000 at the end of 10 years. Present Value of $1 at Compound Interest Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 2 2 0.890 0.826 0.797 0.756 0.694 3 0.840 0.75: 0.712 0.658 0.579 0.792 0.683 0.636 0.522 0.482 4 5 0.747 0.62: 0.567 0.497 6 0.705 0.564 0.507 0.452 0.432 0.376 0.402 0.335 0.279 7 0.665 0.513 S 0.467 0.404 0.327 0.233 0.627 0.592 9 0.424 0.36: 0.284 0.194 10 0.558 0.386 0.322 0.247 0.162 Present Value of an Annuity of $1 at Compound Interest Year 6% 10% 129 15% 209 1 0.943 0.909 0.893 0.870 0.833 2 1.833 1.736 1.690 1.626 1.528 3 2.673 2.487 2.402 2.283 2.106 4 3.465 3.170 3.037 3.605 2.855 3.353 2.589 2.991 5 4.212 3.79: 6 4.917 4.355 4.111 3.785 3.326 3.605 7 5.582 4.868 4.160 4.564 4.968 8 6.210 5.335 4.487 3.837 4.031 9 5.759 6.802 7.360 5.328 5.650 4.772 5.019 10 6.145 4.192 a. Determine the annual net cash flow from operating the cruise ship. Revenues Variable expenses Fixed expenses (other than depreciation) Annual net cash flow b. Determine the net present value of this investment, assuming a 6% minimum rate of return. Use the present value tables provided above. If required, round to the nearest whole dollar. Present value of annual net cash flows Present value of residual value Total present value Amount to be invested Net present value