Royal Caribbean Cruises Would Like to Add an Additional Ship

question 7

Multiple Choice

Royal Caribbean Cruises would like to add an additional ship to its fleet. A new ship will cost $1.4 billion to build. Royal Caribbean plans to use cash and a long-term loan to finance the production of the new ship. However, the current interest rate on a $900 million loan is 5%, which Royal Caribbean feels is high. Which key consideration for choosing a form of financing does this example illustrate?

• A) amount of financing
• B) external factors
• C) cost of financing
• D) term of financing

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Definitions:

Hypothesis

A proposed explanation made on the basis of limited evidence as a starting point for further investigation.

Correlations

Statistical measures that indicate the extent to which two or more variables fluctuate together.

Cognitive Psychologists

Scientists who study the mental processes underlying perception, thought, learning, memory, and decision-making.

Mental Represent

The mental imagery or symbolic representation of objects, events, or concepts in the mind.