Problem
The purchase costs of cargo ships are estimated to be $800 per ton. A shipping company purchases a 30,000-ton cargo ship for transpacific operation. The ship carries 20,000 tons of cargo per month and stays at the dock one month a year for major repair that costs $20,000. The shipping company has operational net income (OP) of $20 per ton. The administrative cost allocated to this operation is $30,000 per month. At the end of a 20-year life, the ship is sold for scrap at $100 per ton. If the shipping company uses MARR of 6%, what is the ship's lifetime worth?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.