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OpenSeas, Inc. is evaluating the purchase of a new cruise ship. The ship will cost $497...

OpenSeas, Inc. is evaluating the purchase of a new cruise ship. The ship will cost $497 ​million, and will operate for 20 years. OpenSeas expects annual cash flows from operating the ship to be $70.1 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 your purchase decision would​ change?

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SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

jeff jeffy answered 1 year ago
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