OpenSeas, Inc., is evaluating the purchase of a new cruise ship. The ship will cost $500 million, and will operate for 20 years. OpenSeas expects annual cash flows from operating the ship to be $70 million (at the end of each year) and its cost of capital is 12%.1. Prepare an NPV profile of the purchase using discount rates of 2.0 %, 11.5% and 17.0. 2. Identify the IRR on a graph.
3. How far off could OpenSeas' cost of capital estimate be before your purchase decision would change?4. Should OpenSeas proceed with the purchase? A. Yes, because at a 11.5% discount rate, the NPV is positive.
B. No, because at a 11.5 % discount rate, the NPV is positive.
C. Yes, because at a11.5 % discount rate, the NPV is negative.
D. No, because at a 11.5 % discount rate, the NPV is negative.

Jennifer purchased a house in a brand new development in the outskirts of town. when her house was built, the nearest fire department was nearly 20 miles away. as her neighborhood developed, the density of the community called for a new fire department 1.5 miles away. what effect will the new fire station have on her homeowners insurance premium? a. a new fire department will be more demanding on local taxes. her annual premium will go up. b. the location of a fire department has no bearing on the value of her house. her annual premium will stay the same. c. the new fire department will reduce the risk of financial loss in her home. her annual premium should decrease. d. with a fire department so close (less than 5 miles), financial risk on jennifer’s home practically disappears. she will not need to pay insurance anymore.