these are book examples not available for credit

1. OpenSeas, Inc. is evaluating the purchase of a new cruise ship. The ship would cost $ 498 million, but would operate for 20 years. OpenSeas expects annual cash flows from operating the ship to be $ 69.5million(at the end of eachyear) and its cost of capital is 12.2 %

a. Prepare a NPV profile of the purchase using discount rates of 2.0 %, 11.5 % and 17.0 % (round to the nearest integer)

b. Identify the IRR on a graph.

c. Is the purchase attractive based on theseestimates?

d. How far off couldOpenSeas' cost of capital estimate be before your purchase decision wouldchange? (NOTE: Subtract the discount rate from the actual IRR. Use Excel to compute the actualIRR.)

2. You have been offered a verylong-term investment opportunity to increase your money one hundredfold. You can invest $1,200 today and expect to receive $120,000 in 40 years. Your cost of capital for this(very risky) opportunity is 16 %. What does the IRR rule say about whether the investment should beundertaken? What about the NPVrule? Do theyagree?

What is the IRR? (Round to one decimalplace.)

The IRR of this investment opportunity is (round to one decimal place