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Please. answer A B C & D OpenSeas, Inc. is evaluating the purchase of a new cruise ship. The ship would cost $495 million, but
Please. answer A B C & D
OpenSeas, Inc. is evaluating the purchase of a new cruise ship. The ship would cost $495 million, but would operate for 20 years. Open Seas expects annual cash flows from operating the ship to be $71.3 million (at the end of each year) and its cost of capital is 12.4% a. Prepare an NPV profile of the purchase using discount rates of 2.0%, 11.5% and 17.0%. 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. a. Prepare an NPV profile of the purchase using discount rates of 2.0%, 11.5% and 17.0%. The NPV for a discount rates of 2.0% is $ million. (Round to the nearest integer.)Step by Step Solution
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