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

OpenSeas, Inc. is evaluating the purchase of a new cruise ship. The ship would cost $ 496 ​million, but would operate for 20 years. OpenSeas expects annual cash flows from operating the ship to be $ 69.6 million​ (at the end of each​ year) and its cost of capital is 12.2 %

a. Prepare an NPV profile of the purchase using discount rates of 2.0 %​,  11.5 % and 17.0 %.

b. Identify the IRR ​(to the nearest​ 1%) on a graph.

c. Is the purchase attractive based on these​ estimates?

d. How far off could​ OpenSeas? cost of capital be​ (to the nearest​ 1%) before your purchase decision would​ change?

Note​: Subtract the discount rate from the actual IRR. Use Excel to compute the actual IRR.

PLEASE SHOW ALL WORK FORMULAS AND STEPS

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