Problem 9-4 Present Value and "What If Analysis National Cruise Line, Inc. is considering the acquisition of a new ship that will cost $200,000,000. In this regard, the president of the company asked the CFO to analyze cash flows associated with operating the ship under two alternative itineraries: Itinerary 1, Caribbean Wi nter Alaska Summer and ltinerary 2 Caribbean Winter/Eastern Canada Summer. The CFO estimated the following cash flows, which are expected to apply to each of the next 15 years: Caribbean/Alaska Caribbean/ Eastern Canada S 120,000,000 105,000,000 Net revenue Less: 5,000,000) (24,000,000) Direct program expenses (20,000,000) (20,000,000) Indirect program expenses (21,000,000) (21,000,000) Non-operating expenses Add back depreciation 115,000,000 115,000,000 169,000,000 155,000,000 Cash flow per year The estimated cost of the new ship and during of expected cash flows is Estimated cost of new ship 200.000.000 15 Estimated period of cash flows in years Required a. For each of the itineraries, calculate the present values of the cash flows using required rates of return of both 12 and 16% using both present value factors and separately using Excel PV function. Assume a 15-year time horizon. Should the company purchase the ship with either or both required Caribbean/Alaska 12% 16%