Question

In: Finance

LakeCraft is considering investing in a cruise ship with an expected life of 15 years that...

LakeCraft is considering investing in a cruise ship with an expected life of 15 years that costs $135 million and will produce net cash flows of $11 million per year. LakeCraft's cost of capital is 8%. Enter your answers rounded to 2 DECIMAL PLACES.

What is the payback period?

What is the net present value (NPV) of the project?

________million (Enter your answer in millions of dollars)

Solutions

Expert Solution

jeff jeffy answered 2 years ago
Next > < Previous

Related Solutions

hanex limited is considering investing $50,000/- in a new machine with an expected life life of...
hanex limited is considering investing $50,000/- in a new machine with an expected life life of 5 years. the machine will have no scrap value at the end of five years.it is expected that 2000 units will be sold each year at a selling price of $3.00 per unit, variables production cots are expected to be $1.65 per unit, while incremental fixed cost, mainly the wages of maintenance engineer are expected to be $10.000/- per year. Hanex limited uses a...
National Cruise Line is considering the acquistion of a new ship that will cost $200,000. In...
National Cruise Line is considering the acquistion of a new ship that will cost $200,000. In this regard, the president of the company asked the CEO to analyze cash flows under two itineraries (Alaska and Canada). See following cash flows: Net Revenue: Alaska - 120,000,000, Canada-105,000,000 Less: Direct Program Expense: Alaska- 25,000,000, Canada- 24,000,000 Indirect Program Expense- Alaska- 20,000,000, Canada- 20,000,000 Nonoperating Expense- Alaska-21,000,000, Canada- 21,000,000 Add Back Depreciation- Alaska 115,000,000, Canada- 115,000,000 Cash flow per year: Alaska 169,000,000, Canada...
A firm is considering investing $42,000 in equipment that is expected to have a useful life...
A firm is considering investing $42,000 in equipment that is expected to have a useful life of four years and is expected to reduce (save) the firm’s labor costs by $8,900 per year. The equipment can be sold for $18,000 at the end of the period. Assume the firm pays a 40% income tax rate on its taxable income and uses the declining balance (200%) depreciation method. The firm’s after tax MARR is 5% per year. What are the after-tax...
A cruise ship company is considering the purchase of 3 large ships for a total cost...
A cruise ship company is considering the purchase of 3 large ships for a total cost of $2,500,000. The company is also considering the purchase of 5 small ships for a total cost of $1,400,000. Both fleets would have estimated useful lives of 20 years. The discount rate for both alternatives is 9% Information regarding these two alternatives is as follows: 3 large ships 5 small ships Annual revenues (accrued) $500,000 $380,000 Annual expenses (accrued) $200,000 $180,000 Annual cash inflows...
You are considering investing in three assets. Asset A has an expected return of 15% and...
You are considering investing in three assets. Asset A has an expected return of 15% and standard deviation of 32%. Asset B has an expected return of 9% and standard deviation of 23%. Asset C is risk-free with an expected return of 5.5%. The correlation between A and B is 0.25. a) What is the expected return and standard deviation of the optimal risky portfolio? (2) b) Suppose your portfolio must yield an expected return of 12% and be efficient....
Entity A is a listed company that operates the cruise ship business. One of the cruise...
Entity A is a listed company that operates the cruise ship business. One of the cruise ships was purchased on 1 Oct 2011. This cruise ship is made up of three main components: (1) cruise’s fabric, (2) cabins and entertainment area and (3) fittings propulsion system. Details of the cost of its components and their estimated useful lives are as below: Components Original cost Depreciation basis (1) Cruise’s fabric (hull, decks, etc.) HK$37,500,000 50 years straight-line (2) Cabins and entertainment...
​OpenSeas, Inc. is evaluating the purchase of a new cruise ship. The ship will cost $...
​OpenSeas, Inc. is evaluating the purchase of a new cruise ship. The ship will cost $ 495 million and will operate for 20 years. OpenSeas expects annual cash flows from operating the ship to be $ 69.8 million and its cost of capital is 12.1 %. a. Prepare an NPV profile of the purchase. b. Identify the IRR on the graph. c. Should OpenSeas go ahead with the​ purchase? d. How far off could​ OpenSeas's cost of capital estimate be...
​ ​OpenSeas, Inc. is evaluating the purchase of a new cruise ship. The ship will cost...
​ ​OpenSeas, Inc. is evaluating the purchase of a new cruise ship. The ship will cost $ 500$500 ​million, and will operate for 2020 years. OpenSeas expects annual cash flows from operating the ship to be $ 70.0$70.0 million and its cost of capital is 12.0 %12.0%. a. Prepare an NPV profile of the purchase. b. Identify the IRR on the graph. c. Should OpenSeas proceed with the​ purchase? d. How far off could​ OpenSeas' cost of capital estimate be...
​OpenSeas, Inc. is evaluating the purchase of a new cruise ship. The ship will cost $...
​OpenSeas, Inc. is evaluating the purchase of a new cruise ship. The ship will cost $ 495 ​million, and will operate for 20 years. OpenSeas expects annual cash flows from operating the ship to be $ 70.7 million and its cost of capital is 12.1 %. a. Prepare an NPV profile of the purchase. b. Identify the IRR on the graph. c. Should OpenSeas proceed with the​ purchase? d. How far off could​ OpenSeas' cost of capital estimate be before...
Bark company is considering investing in a project that costs $70,000, has an expected useful life...
Bark company is considering investing in a project that costs $70,000, has an expected useful life of 3 years, no salvage value, and will increase net annual cash flows by $28,650. What is the internal rate of return?
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT