Carnival Corporation has recently placed into service some of the largest cruise ships in the world. One of these ships, the Carnival Glory, can hold up to 3,000 passengers and cost $510 million to build. Assume the following’ additional information:
- The average occupancy rate for the new ship is estimated to be 80% of capacity.
- There will be 300 cruise days per year.
- The variable expenses per passenger are estimated to be $75 per cruise day.
- The revenue per passenger is expected to be $310 per cruise day.
- The fixed expenses for running the ship, other than depreciation, are estimated to be $78,000,000 per year.
- The ship has a service life of 10 years, with a salvage value of $85,000,000 at the end of 10 years.
- Determine the annual net cash flow from operating the cruise ship.
- Determine the net present value of this investment, assuming a 12% minimum.
- Assume that Carnival decided to increase its price so that the revenue increased to $320 per passenger per cruise day. Would this allow Carnival to earn a 15% rate of return on the cruise ship investment assuming no change in any of the other assumptions?
Click on Buy Solution and make payment. All prices shown above are in USD. Payment supported in all currencies. Price shown above includes the solution of all questions mentioned on this page. Please note that our prices are fixed (do not bargain).
After making payment, solution is available instantly.Solution is available either in Word or Excel format unless otherwise specified.
If your question is slightly different from the above question, please contact us at firstname.lastname@example.org with your version of question.