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SeaCruises plc is evaluating the purchase of a new ship. The ship would cost 25...

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Finance

SeaCruises plc is evaluating the purchase of a new ship. The ship would cost 25 million upfront to purchase, and it would operate for 10 years. The net cash flows from operating the ship are expected to be 4 million at the end of the first year, and to grow at 2% per year. At the end of 10 years, the ship will be sold for an expected value of 50 million. The companys cost of capital is 1% per year. What is the Net Present Value of this investment, in million?

A.

86.68 million
B.

106.94 million
C.

61.68 million
D.

41.42 million

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