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Background The RMS Titanic ocean liner was constructed in 1912 in Ireland and operated by the White Star Line. In its maiden voyage the Titanic struck an iceberg and sank in the Atlantic Ocean. 1,517 lives were lost, and 705 passengers survived. The cost of building the Titanic in 1912 was $7,500,000 and the revenues from the ticket sales for the maiden voyage was $70,632. Titanic was expected to generate $2,000,000 of revenues each year as of 1912. The Titanic disaster fascinates the public to this day, perhaps more than any other disaster. The film Titanic was produced by James Cameron and released in 1997 a romantic and disaster story about the Titanic liner. The film achieved critical and commercial success and won 11 Oscars. In 1997 the cost of production of the film was $200,000,000, and the worldwide ticket and DVD sales were reported to be $1,843,201,268. The uniform annual revenues after the first year have been $11,155,000/year. . Assumptions The average inflation/interest rate from 1912 through 2021 is a constant 3.8%. Consider the scenario that the Titanic liner had survived the mishap and continued service for an additional 24 years (i.e., equal economic lives for both alternatives). In this case, the uniform annual revenues would have been $2,000,000/year for 24 years (disregard the initial $70,632 ticket sales). Consider 2021 as the last year in this study. Insurance premiums and payouts are not considered in this study. . Answer the questions in the following pages and show all work. 1 Summary: Year of Production Cost of Production Initial Revenue (Year 0) Uniform Annual Revenues N (compared to 2021) i Titanic Liner 1912 $7,500,000 $70,632 $2,000,000 109 3.80% Titanic Film 1997 $200,000,000 $1,843,201,268 $11,155,000 24 3.80% QUESTION 1 Assuming the liner had not sunk and continued service for 24 years and generated $2,000,000 of uniform annual revenue per year, compute the equivalent uniform annual revenue in the 1997-2021 period, and compare with the annual revenues of the film, A(1997). Ignore the actual initial revenue of $70,632 in this scenario. QUESTION 2 Still assuming that the liner had not sunk, compute the equivalent present worth of the liner's 24 uniform annual revenues in 1911, PW(1912). Then, compute the equivalent of this present worth in 2021, PW(2021). QUESTION 3 Compute the equivalent present value (2021) of the revenues of the film, PW(2021). Compare with the liner's PW(2021). QUESTION 4 Still assuming that the liner had not sunk, compute the net revenue (profit), PW(2021), of the two alternatives (liner and film), and comment. (Note: net revenue = revenues - costs)