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 1 year ago

Next > < Previous

Related Solutions

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?

You are considering the purchase of a machine with an expected life of 3 years. It...

You are considering the purchase of a machine with an expected life of 3 years. It costs $800,000 and belongs to class 10 (CCA rate = 30%). Its estimated market value at the end of 3 years equals $125,000. The number of products you expect to sell over the next 3 years is 20,000, 25,000 and 20,000 in years 1, 2 and 3, respectively. Expected selling price per unit is $100 while annual production costs consist of $50,000 in fixed...

Subjects