Opulence Corporation operates several large cruise ships. One of these ships, the Bellwether, can hold up to 2,500 passengers and cost $500 million to build. Assume the following additional information: There will be 300 cruise days per year operated at a full capacity of 2,500 passengers. The variable expenses per passenger are estimated to be $80 per cruise day. The revenue per passenger is expected to be $400 per cruise day. The fixed expenses for running the ship, other than depreciation, are estimated to be $62,400,000 per year. The ship has a service life of 10 years, with a residual value of $80,000,000 at the end of 10 years. Present Value of $1 at Compound Interest Present Value of an Annuity of $1 at Compound Interest Year 6% 10% 12% 15% 20% Year 6% 10% 12% 15% 20% 1 0.943 0.909 0.893 0.870 0.833 1 0.943 0.909 0.893 0.870 0.833 2 0.890 0.826 0.797 0.756 0.694 2 1.833 1.736 1.690 1.626 1.528 3 0.840 0.751 0.712 0.658 0.579 3 2.673 2.487 2.402 2.283 2.106 4 0.792 0.683 0.636 0.572 0.482 4 3.465 3.170 3.037 2.855 2.589 5 0.747 0.621 0.567 0.497 0.402 5 4.212 3.791 3.605 3.352 2.991 6 0.705 0.564 0.507 0.432 0.335 6 4.917 4.355 4.111 3.784 3.326 7 0.665 0.513 0.452 0.376 0.279 7 5.582 4.868 4.564 4.160 3.605 8 0.627 0.467 0.404 0.327 0.233 8 6.210 5.335 4.968 4.487 3.837 9 9 0.592 0.424 0.361 0.284 0.194 9 6.802 5.759 5.328 4.772 4.031 10 0.558 0.386 0.322 0.247 0.162 10 7.360 6.145 5.650 5.019 4.192 a. Determine the annual net cash flow from operating the cruise ship. Revenues Variable expenses Fixed expenses 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