Question: I also need help with b,c and d please Open Seas, Inc. is evaluating the purchase of a new cruise ship. The ship will cost
I also need help with b,c and d please
Open Seas, Inc. is evaluating the purchase of a new cruise ship. The ship will cost $501 million, and will operate for 20 years. Open Seas expects annual cash flows from operating the ship to be $70.3 million and its cost of capital is 12.2% a. Prepare an NPV profile of the purchase. b. Identify the IRR on the graph. c. Should Open Seas proceed with the purchase? d. How far off could OpenSeas' cost of capital estimate be before your purchase decision would change? a. Prepare an NPV profile of the purchase. To plot the NPV profile we compute the NPV of the project for various discount rates and plot the curve. Open Seas, Inc. is evaluating the purchase of a new cruise ship. The ship will cost $501 million, and will operate for 20 years. Open Seas expects annual cash flows from operating the ship to be $70.3 million and its cost of capital is 12.2% a. Prepare an NPV profile of the purchase. b. Identify the IRR on the graph. c. Should Open Seas proceed with the purchase? d. How far off could OpenSeas' cost of capital estimate be before your purchase decision would change? a. Prepare an NPV profile of the purchase. To plot the NPV profile we compute the NPV of the project for various discount rates and plot the curve
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