Average standard hook cycle - indirect cost, Financial Management

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Following is the information furnished by a private port for investing Rs. 10 crore in a 20 Tonne Gantry Crane. The entire funding is from a loan carrying an interest of 11%. The loan is to be repaid in 4 equal installments.

The machine goes for maintenance at the end of the second year that would cost Rs. 8000000. The Direct Cost (including Salaries) amounted to Rs. 400000 Per Annum. The Indirect Cost apportioned Rs. 100000 Per Annum.

The Average standard hook cycle (lifting the cargo from ship and placing it on the ground) is 20 minutes and the crane's Average standard operation is 20hrs/day. The crane is not used for 5 days due to national holidays and 5 more days for general maintenance.

The Berth Occupancy is 60% and so the crane can be used for 60% of its usable time. The crane is eligible for a depreciation of 25% PA on SLM basis.

The firm charges Rs. 1500 per hook cycle. A tax rate of 40% may be assumed for computation purpose. Give your opinion if the firm can go ahead with the acquisition of the G. Crane assuming that there will be no change in any of the figures during the next four years.

 

 


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