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 $70.0 million and its cost of capital is 12.0%
a. Prepare an NPV profile of the purchase using discount rates of 2.0%, 11.5% and17.0%.
b. Identify the IRR on a graph.
c. Should OpenSeas go ahead with the purchase?
d. How far off could OpenSeas' cost of capital estimate be before your purchase decision would change? (NOTE: Subtract the discount rate from the actual IRR. Use Excel to compute the actual IRR.)

What is private equity investing? who participates in it and why? how is palamon positioned in the industry? how does private equity investing compare with public market investing? what are the similarities and differences between the two? why is palamon interested in teamsystem? does it fit with palamon’s investment strategy? how much is 51% of teamsystem’s common equity worth? use both a discounted cash flow and a multiple-based valuation to justify your recommendation. what complexities do cross-border deals introduce? what are the specific risks of this deal? what should louis elson recommend to his partners? is it a go or not? if it is a go, what nonprice terms are important? if it’s not a go, what counterproposal would you make?