QUESTION 1 Majestic of the Seas Limited is considering adding a new ship to its fleet that can accommodate 3500 passengers given the new social distancing recommendations from the CDC. The company has sourced quotes of ships from two companies. The quotation from Able Tran Limited is $27,500,000 and $32,250,000 from High Seas Limited. The company projected the following cash flows for each ship over a four-year period: Year Able Tran Ltd High Seas Ltd 7 000 000 10 500 000 2 5 500 000 7 750 000 8 750 000 10 250 000 4 12 500 000 15 000 000 Note: The company has estimated an inflation rate of 5% each year and a discounted factor of 9%. A. Calculate the payback period for each ship using the nominal cash flow and real cash flow methods. 12 marks B. Calculate the NPV for each ship using the real cash flow method. 10 marks C. Determine the profitability index of each ship. 4 marks D. Which company should Majestic of the Seas Limited select and justify your