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?OpenSeas, Inc. is evaluating the purchase of a new cruise ship. The ship will cost $495...

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Finance

?OpenSeas, Inc. is evaluating the purchase of a new cruise ship.The ship will cost $495 million, and will operate for 20years.OpenSeas expects annual cash flows from operating the ship to be$71.4 million and its cost of capital is 12.3%.

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 bebefore your purchase decision would? change?

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?OpenSeas, Inc. is evaluating the purchase of a new cruise ship.The ship will cost $495 million, and will operate for 20years.OpenSeas expects annual cash flows from operating the ship to be$71.4 million and its cost of capital is 12.3%.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 bebefore your purchase decision would? change?

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