​OpenSeas, Inc. is evaluating the purchase of a new cruise ship. The ship would cost $502 million, but would operate for 20 years. OpenSeas expects annual cash flows from operating the ship to be...

​OpenSeas, Inc. is evaluating the purchase of a new cruise ship. The ship would cost $502 million, but would operate for 20 years. OpenSeas expects annual cash flows from operating the ship to be $71.1 million​ (at the end of each​ year) and its cost of capital is 12.4%

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.