Carnival Corporation has recently placed into service some of the largest cruise ships in the world. One of these ships, the Carnival Dream, can hold up to 3,600 passengers and cost $750,000,000 to build. Assume the following additional information: Solution A.) Annual net cash flow: Revenues = 320* 3600 * 280 = 3225,60000 Less: variable Cost = 95 * 320 * 3600 = 1094, 40000 Less: Fixed EXpenses othe than dEpreciation = 65000000 Thereofre, Annual Net Cash Flow = 148120000 (No need to reduce depreciation, Because there is no info about tax rate ) B.)NEt PRESENT VALUES Present value of inflows = 148120000*5.650 = 836878000 Present Value of Residual Value = 100000000*0.322= 32200000 Total Preent Value = 869078000 Less INitial Investment = 750000000 Net Present Value =119078,000 $ THanks .

1. Carnival Corporation has recently placed into service some of the largest cruise ships in the
world. One of these ships, the Carnival Dream, can hold up to 3,600 passengers and cost
$750,000,000 to build. Assume the following additional information:
Solution
A.)
Annual net cash flow:
Revenues = 320* 3600 * 280 = 3225,60000
Less: variable Cost = 95 * 320 * 3600 = 1094, 40000
Less: Fixed EXpenses othe than dEpreciation = 65000000
Thereofre, Annual Net Cash Flow = 148120000
(No need to reduce depreciation, Because there is no info about tax rate )
B.)NEt PRESENT VALUES
Present value of inflows = 148120000*5.650 = 836878000
Present Value of Residual Value = 100000000*0.322= 32200000
Total Preent Value = 869078000
Less INitial Investment = 750000000
Net Present Value =119078,000 $
THanks