Ocean Carriers

A | Continue operating the cruise ship in the current area. | 10% | $1.0M | $0.9M | $0.7M | $0.7M | $0.7M | $4.0M |

* Taxation and salvage: Tax regulation in every country is different, so the company should consider it when calculating NPV. Also, it should clarify the depreciation expense and interest expense to

Relationship between Age and Ship Price: From the regression, we find that as the ship ages by one year, the price of the ship drops by $ 4.54 mln. This makes sense because as with any other vehicle or asset, the efficiency of the ship drops with age. As it gets older, the carrying value of the ship lowers due to depreciation.

3. Returning the consulting cost to $15,400 per month, at the original discount rate of .09, what is the impact on NPV if you double the number of employees participating in the

The reason is that the NPV of U.S. company for the 15-year project is $-8,180,953.79(US15) and the NPV value of Hong Kong company is $-403,998.93(HK15). In both circumstances, the company would lose money by selling it at 15 years.

It follows that the NPV at t=0 can be found by discounting the above number three years at 12% -- doing so you get a value of $0.2669 million – which is an estimate of what you pay for the sequel right at t=0.

The general economic climate is another external factor however it relates to the product market. This can affect the employment relationship as there will be a drop in demand of products should the

•Study questions: 1.Compute the NPV of Ariel-Mexico in pesos. How should this NPV be translated into Euros? Assume expected future inflation for France is 3% pa. 2.Compute the NPV in Euros by translating the project’s future peso cash flows into Euros at expected future spot exchange rates. Note that Ariel’s Euro hurdle rate for a project of this type was 8%. Again, assume that annual inflation rates are expected to be 7% in Mexico and 3% in France. 3.Compare the two sets of calculations and the corresponding NPVs. How and why do they differ? Which approach should Arnaud Martin use? 4.Suppose Mexican inflation is projected at3% (assume French inflation remains at 3%). How does this affect the NPV calculations? 5.Suppose Ariel expects a

2. Net Present Value – Secondly, Peter needs to investigate the Net Present Value (NPV) of each project scenario, i.e. job type, gross margin, and # new diamonds drills purchased. The NPV will measure the variance of the present value of cash outflow (drilling equipment investment) versus the future value of cash inflows (future profits), at the benchmark hurdle rate of 20%. A positive NPV associated with the investment means that the investment should be undertaken as it exceeds the minimum rate of return. A higher NPV determines which project scenario will have the highest return on cash flow, hence determining the most profitable investment in terms of present money value.

Question 5: What threats exist for the future performance of the cruise-line industry and, specifically, of Carnival Cruise Lines? If you were in charge of Carnival, how would you (a) try to prevent these threats from becoming reality and (b) deal with them if they did become reality?

2) Will we also assume the length and proposed annual benefits for the following years in the NPV analysis?

The guarantee of work, an excellent benefit that offers to employees and the quality of training program at the Seafarers Harry Lundeberg School of Seamanship are the reasons why I want to be a Merchant Mariner. A Merchant Mariner career provide an established job and the outstanding of income to the seamen moreover, it also offers a great benefit to cover their family. With the prospect of jobs demand a merchant mariner has opportunities for growth in the marine jobs and it has high level demand to serve the maritime shipping industry, particularly in the private sector like a cruise ship and cargo industry that operate around the world. These private sector depend on the Merchant Mariners to perform preventative maintenance on equipment and delivery cargo on time. Base on the world consumer and the US economy depend on cargo ship and Cruise ships to support gross domestic product.

The total NPV for the project, therefore, is $.08 million, or $80,000, based on the formula of $47.24-$47.15 (with rounding). The full calculation is shown in Appendix A.

This will contribute to an increase in vessels at the port. The key incremental Quantifiable Benefits are outlined below.

For the engine cost, there is also a positive correlation thus; increase in this cost may also vary in the increase in average age of fleet per hour. However, on this cost, only 61% is determined in the regression equation. Like in the airframe cost, there will be additional 2.6 in cost for every hour of average age in thousands.