Ocean Carriers

bloody shame Linn is the Vice President of Finance for sea Carriers and she has been tasked with ascertaining whether or not purchasing a new enrapture for the croak would be a wise business move. The outdo trend for Mary to determine this is to use the NPV method in set to find out if they should go ahead with the purchase, or prevail off. She should determine cash flows for each year with the approach pattern: tax taxation - opex - tax - working bang-up + clean The ship is red ink to set the company tole measure $39 million, spread all over 3 years. 10% of the purchase price is due the commencement exercise year, 10% entrust be paid the second year, with the last-place sum up being due the third year on delivery. on the face of it during construction, there will be no influx of cash. Also, for all year after delivery the ship will be depreciated with the straight-line method of $1.56 million. The charter companys revenue for the year is goi ng to be equal to the daily pretend nix for the gravy holder, with the operating expenses deducted. One of the companys clients is go a contract that will guarantee the daily engage rate of $20,000 for three years, plus an additional $200 a twenty-four hour period for years 2 and 3 or $20,200 and $20,400. The future(a) years, Mary send packing assume that the boat will be packd at the market rates.

Column J contains information on the hire rates as it pertains to the age of the boat. The natural action of the boat also comes into play when determining the gross profit. Mary stand determine it by tak ing the daily revenue, which is the pass b! elief daily rate minus operating expenses, and multiplying it by the hold up of age of the year that the boat would be in ungratified service (not in for maintenance). She should also include operating expenses for the eld in maintenance since the company still has to pay clock time it is not in use. These amounts can be found in column M If Mary then took out funds for taxes and capital expenditures she would have net income. Taxes occur at a rate of 35% of gross profit less capital...If you motivation to get a full essay, order it on our website: OrderCustomPaper.com

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