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Question - OpenSeas, Inc. is evaluating the purchase of a new cruise ship. The ship would cost $500 million, but would operate for 20 years. OpenSeas expects annual cash flows from operating the ship to be $70.0 million (at the end of each year) and its cost of capital is 12.0%.
a. Prepare a 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?
Alphabet Company, which uses the periodic inventory method, If Alphabet Company uses the LIFO method, what is the cost of its ending inventory?
XYZ Corporation distributed land Jim, its sole shareholder, in a liquidating distribution. At the time of the distribution, the land had a fair market value of $120,000 and XYZ Corporation’s adjusted basis in the land was $100,000. The land was encum..
If the risk-free rate is 5%, ABC's beta is 1.2, market risk premium is 5% and tax rate is 30%, estimate the cost of capital for building the sports stadium.
A Foundation has agreed to pay you and your descendants $711 a month forever. What is the present value of the cash flows assuming and annualized discount rate of 6.08%?
Juice from each plum and doing so in a more efficient manner. Mr. Bensen gave Derek the following information. What is the NPV of the PJX5?
Anne purchased an annuity from an insurance company that promised to pay her $12,000 per year for the next ten years. Anne paid $94,800 for the annuity, and in exchange she will receive $120,000 over the term of the annuity. How much of the first $12..
Financial Accounting Assignment - Use the 'ABC Learning' and 'One Tel' documentaries to identify: issues that led to the corporations collapse
Benedict is 37 years old and would like to establish a retirement plan. Develop a spreadsheet model that could be used to assist Benedict with retirement planning. Assume that Benedict’s employer contributes 6% of Benedict’s salary to his retirement ..
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Prepare a schedule of consolidated net income and apportionment to non-controlling and controlling interests for 2011.
Prepare the equity section of the balance sheet. At December 31, 2017, poe enterprises had the balances in its shareholders section of the balance sheet.
Canberra Company uses a job order cost accounting system. During the current month, the factory payroll of $234,000 was paid in cash. The amount of labor classified as direct labor was three times greater than the amount classified as indirect labor...
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