Economy Shipping Company
It is recommended that Economy Shipping Company (ESC) replace the
steamboat, Cynthia, with a new diesel powered boat.
The analysis assumed no operating cost in 1950. Although ESC was
presumably still in service during this analysis, the costs associated
with the project evaluation were not accounted for until 1951. It was
also implicit in the NPV calculations that any upgrade required
subsequent to 1950 could be performed without any interruption to the
daily operations and were performed at the beginning of the year.
Therefore, the stoker upgrade and the engine replacements were
considered on Jan 1st of the intended year and did not require any
downtime for the installation.
The evaluation considered four different scenarios:
1. Rehabilitation of Cynthia with the stoker conversion occurring in
1950
2. Rehabilitation of Cynthia with the stoker conversion occurring in
1952
3. Purchase of a new diesel-powered boat with 2 shifts, 12-hour
working day
4. Purchase of a new diesel-powered boat with 3 shifts, 8-hour working
day
Since ESC was considering other projects with a rate of return of 10%,
each of the above options were considered using the same rate of
return. The company?s balance sheet suggests that management was very
conservative. The debt-to-equity ratio in 1950 was 0.075, indicating
that the company could easily borrow at the going rate of 3% without
fear of bankruptcy. Moreover, the company had sufficient funds to
purchase four new diesel-powered boats. Overall, ECS was in a very
strong position to quickly upgrade their fleet and gain any advantage
that may come with the new diesel-powered boats.
The influence of the union to change the working hours for the crew
members is noteworthy in this analysis. If the union succeeded, the
steamboats would not be capable of accommodating the 3-shift
requirement and therefore be noncompliant with the new regulation. If
the new regulation had fines associated for any vessel not in
compliance with the new guidelines, the results for the steamboat
scenarios would only get worse. In this case, the diesel-powered
boats could accommodate the anticipated ruling and therefore continue
to operate without fear of being unlawful.
Another disadvantage against rehabilitating Cynthia was its age. At
the time of the decision the steamboat had already been in operation
for 23 years. Although, the realizable cost to renovate the steamboat
was already known, the intangible aspect of this alternative was the
status of the boat once refurbished. It should be noted that with
any overhaul, there are still aspects to the boat that will remain
?old? and will eventually fail. The maintenance and repairs listed in
In the fifth year, I introduced the Gorgon road bike to the market. I produced 5,000 of these bikes and priced them at $2,000 each. As a result of introducing a new product to my company, I had to increase my SCU from 16,871 to 22,721 in order to have enough resources to produce the 5,000 extra bikes. In this year, I also bought back another 86,155 of my
Maintenance for a 120 ton steamboat was $1,800, 36% of it was for wages paid to officers and crew members, 18% of it was for provisions, 12% of it was for incidentals and insurance, and the rest of it was for 25 cords of wood per day, at $2.
Frontier airlines marketing utilizes the 4Ps within the constraints that were listed in the module slides. The product, for all intents and purposes, is the seat, in motion from one place to another. If that seat goes unfilled, it is not stored for later use, but goes bad, like fruit. This is a similar issue of production that hotels face. The unit is constantly produced and expiring, with no option not to produce it if it will not be sold (with the exception of scaling back service on, or closing, a route. Additionally, it is a consumer based product, so frontier needs to be sensitive to the desires of the customer, because there are many choices when flying into and out of Denver.
2. Given the forecasts provided in the case, estimate the expected incremental free cash flows associated with Du Pont’s growth strategy and maintain strategy for the TiO2 market. How much risk and uncertainty surround these future cash flows? Which strategy looks most attractive (i.e., using the DCF (e.g., NPV) method)??
The seventh largest major domestic airline in the United States (US), Southwest Airlines, is commonly known or referred to as a low-cost carrier. Southwest Airlines is the only major airline that provides short-haul, point-to-point service in the United States. In fact it was the first airline of its type ever started; it has become the archetypical low-cost airline. The idea has proven itself so well, that other start-up airlines have based their company strategies upon the basics of Southwest. Today, there are two other low-cost air carriers (the other two airlines are considered national airlines and not major airlines) that are actively and aggressively competing with Southwest Airlines for business and profit turning. The three American low-cost air carriers are currently posting profits even in light of the US economy’s current state of affairs, with Southwest Airlines first, JetBlue second, and Air Tran third, in profits. How is this possible when the major six airlines are reporting losses of millions and millions of dollars each quarter? The answer to this question begins about 30 years ago.
In April 1992, American Airlines launched "Value Pricing" -- a radical simplification of the complex pricing structure that had evolved over more than a decade following deregulation of the U.S. domestic airline industry. American expected that the new pricing structure would benefit consumers and restore profitability to both American and the industry as a whole. The critical issue raised is: Would American's bold initiative work?
“Southwest Airlines ” Standard & Poor’s 12 Apr 2014: n. pag. S&P NetAdvantage. Web. 12 Apr. 2014.
The bill of lading under a charterparty is just a certificate of receipt for the charterer, the bill of lading is not to be seen as a contract of carriage of goods by sea due to the relationship between the shipowner and charterer under a charterparty. When the bill of lading issued by the shipowner is transferred to a third party by the charterer, the right-obligation relationship between the shipowner and the bill of lading indorsee will be effected by the international conventions that related to the bill of lading. And that means the terms governing the relationship between the shipowner and a bill of lading indorsee will be different from the terms originally agreed with the charterer, the shipowner will exposed to greater liability than he initially anticipated. Obviously, the shipowner does not want to see that happen. Under this circumstance, the shipowner always wonder that the terms of the charterparty can be carried through into the terms of bill of lading contracts. So whether it is a charterparty or a bill of lading, the liability of the shipowner would always be the same, and that led to the development of incorporation clause.
Continental Carriers, Inc. | Continental Carriers, Inc This is not an essay. This paper responds to each of the comments raised by the five members of the board. Continental Carriers, Inc. (CCI) should take on the long-term debt. finance the acquisition of Midland Freight, Inc. for a few reasons.
There is an enormous prospect for the Pkolino Company to start a business. The current task has adequate resources and a great plan to keep it operational. Nevertheless, dangers that might plunge Pkolino Company into financial disaster are also present. This is due to the fact that there are always a couple of things that tend to advance in an unanticipated direction even in a well- planned plan. For instance, P’kolino Company’s financial statements do not have provisions for the worst, average, and best scenarios.
During the last few years, Harry Davis Industries has been too constrained by the high cost of capital to make many capital investments. Recently, though, capital costs have been declining, and the company has decided to look seriously at a major expansion program that had been proposed by the marketing department. Assume that you are an assistant to Leigh Jones, the financial vice president. Your first task is to estimate Harry Davis’s cost of capital. Jones has provided you with the following data, which she believes may be relevant to your task.
The topic in which I chose to do a scrapbook on was “How the government affects the airline industry in Canada”. Specifically I chose articles that related to the aftermaths of the September 11th tragedy. This event affected airlines in an enormous manner. Many airlines were facing economical problems and in turned asked the government for assistance. As a result, Canada 3000, which was Canada’s second largest airline carrier filed for bankruptcy protection on October 11th.
Star Appliance is looking to expand their product line and is considering three different projects: dishwashers, garbage disposals, and trash compactors. We want to determine which project would be worth doing by determining if they will add value to Star. Thus, the project(s) that will add the most value to Star Appliance will be worth pursuing. The current hurdle rate of 10% should be re-evaluated by finding the weighted average cost of capital (WACC). Then by forecasting the cash flows of each project and discounting them by the WACC to find the net present value, or by solving for the internal rate of return, we should be able to see which projects Star should undertake.
Logistics is the designing and managing of a system in order to control the flow of material throughout a corporation. This is a very important part of an international company because of geographical barriers. Logistics of an international company includes movement of raw materials, coordinating flows into and out of different countries, choices of transportation, cost of the transportation, packaging the product for shipment, storing the product, and managing the entire process. The concept of logistics is fairly new in the business world. The theoretical development was not used until 1966. Since then, many business practices have evolved and logistics currently costs between 10 and 25 percent of the total cost of an international purchase.
Operations management focuses on carefully managing the processes to reduce and distribute products and services. Related activities include managing purchases, inventory control, quality control, storages, logistics and evaluations. A great deal of focus is on efficiency and effectiveness of processes. Therefore, operations management often includes substantial measurement and analysis of internal processes. Ultimately, the nature of how the operations management is carried out in an organisation depends very much on the nature of products or services in the organisation, for example, retail, manufacturing, wholesale and etcetera.