Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. ?openseas, inc. is evaluating the purchase of a ne

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

90.2K

Verified Solution

Question

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?

Answer & Explanation Solved by verified expert
4.2 Ratings (787 Votes)
    See Answer
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Zin AI - Your personal assistant for all your inquiries!
Become a Member

Transcribed Image Text

?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?

Other questions asked by students

Q

Explain how the financial crisis of 2007-2009 that originated in the real estate market and mortgage...

Finance
Q

1. The exact point in time at which an individual transitions from one developmental phase to...

Psychology
Q

Identify and describe each step in the Accounting Cycle.

Accounting
Q

Su 0 2 ans Use the synthetic division to divide p x by l x...

Calculus
Q

10 8 6 1 10 Equation 5 5 10 6 8 10 Write the equation...

Algebra
Q

Q 5 Presented below are the components related to an office building that Lockard Company...

Accounting
Q

Chang Company provided the following data for this year: The company uses a predetermined...

Accounting
Q

Bandar Industries manufactures sporting equipment. One of the company's products is a football helmet that...

Accounting
Q

AQ= Actual Quantity

Accounting
Q

EXERCISE VII An account pays simple interest as follows: 6% for the first 60 days...

Finance
Q

Only need help on E. I cannot figure out what to debit.

Accounting
Q

Chocolate Corner Company had the following transactions during the current year: Apr. 8....

Accounting