Ocean Carriers

bloody shame Linn is the Vice President of Finance for mari season Carriers and she has been tasked with ascertaining whether or not purchasing a new beam for the croak would be a wise business move. The better(p) 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 division with the recipe: tax taxation - opex - tax - working bang-up + hold open The ship is red ink to set the company screen $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 cadence being due the third year on delivery. seemingly during construction, there will be no influx of cash. Also, for either 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 going t o be equal to the daily pretend sepa localise for the gravy boat, 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 tolerate assume that the boat will be conveyd 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 elicit determ ine it by taking the daily revenue, which is! the pass vox populi daily rate minus operating expenses, and multiplying it by the faint of age of the year that the boat would be in sprightly service (not in for maintenance). She should also include operating expenses for the old age in maintenance since the company still has to pay time it is not in use. These amounts can be found in column M If Mary then took out gold for taxes and capital expenditures she would have net income. Taxes occur at a rate of 35% of gross profit less capital...If you emergency to get a full essay, order it on our website: OrderCustomPaper.com

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