use excel 6. 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 million and its cost of capital is 12%. Using a financial calculator, identify the IRR of the new ship. Should OpenSeas go ahead with the purchase? How far off could OpenSeas’ cost of capital estimate be before your purchase decision would change? (a) IRR=12.72%, Yes, 0.72% (b) IRR=11.25%, No, 0.75% (c) IRR=14.82%, Yes, 2.82% (d) IRR=9.34%, Yes, 2.66%

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Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.