Peaceful Cruises wants to build a new cruise ship that has an initial investment of $350 million. It isestimated to provide an annual cash flow over the next 15 years of $48 million per year. The discountrate is 9%.What is the discounted payback period? Enter your answer rounded to two decimal placesNumber

Discounted payback period (DPP) is a financial metric used to evaluate the feasibility of an…

Answered: Peaceful Cruises wants to build a new…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Suppose you inherit $100,000 at age 25 and immediately invested in a growth fund who’s annual rate of return average is 13%. Five years later, you transfer all proceeds from the scrubs fun into a long-term IRA that pays an average annual rate of 8%. Immediately you start making additional contributions of $7000 per year to the same IRA. Assuming continuous interest, steady interest rates, and a perfect record of making annualcontributions, how much is this IRA worth when you reach the age of 65? The formula that will need to be used is A = P e^r*t + D/r (e^r*t - 1). Hint: use the continuous interest formula to find the accumulated amount for the first five years, which is then the annual investment, P, into the IRA.
A company wants to have $30,000 at the beginning of each 6-month period for the next 4 1/2 years. If an annuity is set up for this purpose, how much must be invested now if the annuity earns 6.42%, compounded semiannually? (b) Solve the problem. (Round your answer to the nearest cent.)$ _____
1. You have two options to purchase a car. Your first option is to purchase the car at $26.200 and pay for it over 36 months with equal monthly payments at 1.9 % interest per year. The second option is for you to purchase the car immediately with cash at a rebate or discounted price lower than $25,000. C. a. Draw a cash flow diagram for the first option b. Using the appropriate compounding interest factor provided on the formula sheet, determine your monthly payments Draw the cash flow diagram that will enable you to determine the equivalent present cost of the total loan repayments you made in (b) above, if funds are presently earning 5 % annual interest compounded annually d. Using the appropriate compounding interest factor provided on the formula sheet, determine the equivalent present cost of the total loan repayments. e. Which of the two options will you choose and why?
OpenSeas, Inc. is evaluating the purchase of a new cruise ship. The ship will cost $499 million and will operate for 20 years. OpenSeas expects annual cash flows from operating the ship to be $69.6 million and its cost of capital is 12.0%. a. Prepare an NPV profile of the purchase. b. Identify the IRR on the graph. c. Should OpenSeas go ahead with the purchase? d. How far off could OpenSeas's cost of capital estimate be before your purchase decision would change? ...
Incognito Company is contemplating the purchase of a machine that provides it with cash savings of $87,000 per year for five years. Interest is 10%. Assume the cash savings occur at the end of each year. Required: Calculate the present value of the cash savings. Note: Use tables, Excel, or a financial calculator. Round your final answer to the nearest whole dollar. (EV of $1. PV of $1. FVA of $1. PVA of $1. EVAD of $1 and PVAD of $1) Present value
YOU ARE A FINANCIAL ANALYST FOR A COMPANY THAT IS CONSIDERING A NEW PROJECT. IF THE PROJECT IS ACCEPTED, IT WILL USE A FRACTION OF A STORAGE FACILITY THAT THE COMPANY ALREADY OWNS BUT CURRENTLY DOES NOT USE. THE PROJECT IS EXPECTED TO LAST 10 YEARS, AND THE ANNUAL DISCOUNT RATE IS 10% (COMPOUNDED ANNUALLY). YOU RESEARCH THE POSSIBILITIES, AND FIND THAT THE ENTIRE STORAGE FACILITY CAN BE SOLD FOR €100,000 AND A SMALLER (BUT BIG ENOUGH) FACILITY CAN BE ACQUIRED FOR €40,000. THE BOOK VALUE OF THE EXISTING FACILITY IS €60,000, AND BOTH THE EXISITING AND THE NEW FACILITIES (IF IT IS ACQUIRED) WOULD BE DEPRECIATED STRAIGHT LINE OVER 10 YEARS (DOWN TO A ZERO BOOK VALUE). THE CORPORATE TAX RATE IS 40%. DISCUSS WHAT IS THE OPPORTUNITY COST OF USING THE EXISTING STORAGE CAPACITY?
It’s time to get a new laptop. The laptop is $1,800. You could put money aside for it each month for one year. If you put the money in an account that earns 4.5%, how much will you have to save each month?Your other option is to finance it over two years paying 7.1%. How much would your monthly payment be?What are the total acquisition costs of each option?
A firm buys a new piece of equipment for $28,808, and will receive a cash flow of $3,700 per year for fourteen years. What is the IRR? (Use a Financial calculator to arrive at the answers. Round the final answer to the nearest whole percent.) IRR %
Incognito Company is contemplating the purchase of a machine that provides it with cash savings of $93,000 per year for five years. Interest is 11%. Assume the cash savings.occur at the end of each year. Required: Calculate the present value of the cash savings. Note: Use tables, Excel, or a financial calculator. Round your final answer to the nearest whole dollar. (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) Present value
Suppose you obtain a five-year lease for a Porsche and negotiate a selling price of $157,000. the annual interest-rate is 8.4%, the residual value is $76,000, and you make a down payment of $5000. Find each of the following. A) the net capitalized cost B) the money factor (round to 4 decimal places) C) the average monthly finance charge (round to the nearest cent) D) the average monthly depreciation (round to the nearest cent) and E) the monthly lease amount (round to the nearest cent)
If you could solve option 5 with the formulas please Option 5: Half the required money is taken out of an investment account that pays monthly interest at a 3% annual rate. The rest of the money is borrowed from a bank at a 4% annual interest rate, should payback within 3 years in equal monthly payments. Find the future value of the money taken from the investment account at the end of the shop development and periodic payments to the bank. Calculate Cumulative interest and principal payments.
Peaceful Cruises wants to build a new cruise ship that has an initial investment of $400 million. It is estimated to provide an annual cash flow over the next 10 years of $57 million per year. The discount rate is 5%. What is the discounted payback period? Enter your answer rounded to two decimal places

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