Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Transcribed Image Text:SeaCruises plc is evaluating the purchase of a new ship. The ship would cost £25 million upfront to purchase, and it would operate for 10 years. The net cash flows from operating
the ship are expected to be £4 million at the end of the first year, and to grow at 2% per year. At the end of 10 years, the ship will be sold for an expected value of £50 million.
The company's cost of capital is 1% per year. What is the Net Present Value of this investment, in £ million?
O A. 41.42 million
B. 86.68 million
OC. 61.68 million
O D. 106.94 million
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