Used Ships and other stuff

[hemulen]

Originally posted by Aramis:
One side thought:

Ships are considered to have a service life of 60-70 years, not 40, so 5% per year is a HUGE drop. 1.5-2% is more likely

Ok. I don't recall seeing service lifetimes quoted anywhere, but 60-70 years sounds like a good number. So, if we say depreciation of 2%/year, we get the following:

60 years: 0.297 * original price
70 years: 0.243 * original price

For the Lab ship at MCr 72, that works out to 21.38 and 17.50. I guess it wouldn't be a straighforward 2% decrease per year though, it would probably devalue more rapidly when new and when old, but it may be a good approximation.

On a 70 year old ship I suspect that it would be worth considerably less than nearly 25% of it's original price, since it's very close to end of service. Companies must write off old ships - presumably there are scrapyards around full of old ships that it's not worth anyone's time to dismantle?

There must be some sort of curve for this price drop, probably for buying used cars...

Mark

 

[aramis]

SSOM lists that many hulls can be expected to serve that long. Supplement 5 lists some AHLs in service longer!

Remember also, I wasn't thinking compounded, which it looks like you are... so I went and did some compounded comparisons...

at 5% compounded per annum that's just under 5% new value at 60 years, and about 59.9% after 10... which is 40% paid off, or 0 equity at 10 years.

Here's a comparison table, truncated to ten-thousandths of new (or 0.01%)
</font><blockquote>code:</font><hr /><pre style="font-size:x-small; font-family: monospace;">Yrs 5% 2% 1% Valuation
5 0.7737 0.9039 0.9509 30% paid
10 0.5987 0.8170 0.9043 40% paid
15 0.4632 0.7385 0.8600 50% paid
20 0.3584 0.6676 0.8179 60% Paid
25 0.2773 0.6034 0.7778 70% paid
30 0.2146 0.5454 0.7397 80% paid
35 0.1660 0.4930 0.7034 90% paid
40 0.1285 0.4457 0.6689 100% paid
45 0.0994 0.4028 0.6361
50 0.0769 0.3641 0.6050
55 0.0595 0.3291 0.5753
60 0.0460 0.2975 0.5471
65 0.0356 0.2689 0.5203
70 0.0275 0.2431 0.4948
80 0.0165 0.1986 0.4475
90 0.0098 0.1623 0.4047
100 0.0059 0.1326 0.3660
110 0.0035 0.1083 0.3310</pre>[/QUOTE]Note: the valuation assumes that they payments are structured such that equity climbs evenly from 20% at 0, to 100% at 40, at 0.5% equity per year. A more realistic amortization lowers equity in the first third, but raises it in the last....

 

[aramis]

SSOM lists that many hulls can be expected to serve that long. Supplement 5 lists some AHLs in service longer!

Remember also, I wasn't thinking compounded, which it looks like you are... so I went and did some compounded comparisons...

at 5% compounded per annum that's just under 5% new value at 60 years, and about 59.9% after 10... which is 40% paid off, or 0 equity at 10 years.

Here's a comparison table, truncated to ten-thousandths of new (or 0.01%)
</font><blockquote>code:</font><hr /><pre style="font-size:x-small; font-family: monospace;">Yrs 5% 2% 1% Valuation
5 0.7737 0.9039 0.9509 30% paid
10 0.5987 0.8170 0.9043 40% paid
15 0.4632 0.7385 0.8600 50% paid
20 0.3584 0.6676 0.8179 60% Paid
25 0.2773 0.6034 0.7778 70% paid
30 0.2146 0.5454 0.7397 80% paid
35 0.1660 0.4930 0.7034 90% paid
40 0.1285 0.4457 0.6689 100% paid
45 0.0994 0.4028 0.6361
50 0.0769 0.3641 0.6050
55 0.0595 0.3291 0.5753
60 0.0460 0.2975 0.5471
65 0.0356 0.2689 0.5203
70 0.0275 0.2431 0.4948
80 0.0165 0.1986 0.4475
90 0.0098 0.1623 0.4047
100 0.0059 0.1326 0.3660
110 0.0035 0.1083 0.3310</pre>[/QUOTE]Note: the valuation assumes that they payments are structured such that equity climbs evenly from 20% at 0, to 100% at 40, at 0.5% equity per year. A more realistic amortization lowers equity in the first third, but raises it in the last....

 

[aramis]

SSOM lists that many hulls can be expected to serve that long. Supplement 5 lists some AHLs in service longer!

Remember also, I wasn't thinking compounded, which it looks like you are... so I went and did some compounded comparisons...

at 5% compounded per annum that's just under 5% new value at 60 years, and about 59.9% after 10... which is 40% paid off, or 0 equity at 10 years.

Here's a comparison table, truncated to ten-thousandths of new (or 0.01%)
</font><blockquote>code:</font><hr /><pre style="font-size:x-small; font-family: monospace;">Yrs 5% 2% 1% Valuation
5 0.7737 0.9039 0.9509 30% paid
10 0.5987 0.8170 0.9043 40% paid
15 0.4632 0.7385 0.8600 50% paid
20 0.3584 0.6676 0.8179 60% Paid
25 0.2773 0.6034 0.7778 70% paid
30 0.2146 0.5454 0.7397 80% paid
35 0.1660 0.4930 0.7034 90% paid
40 0.1285 0.4457 0.6689 100% paid
45 0.0994 0.4028 0.6361
50 0.0769 0.3641 0.6050
55 0.0595 0.3291 0.5753
60 0.0460 0.2975 0.5471
65 0.0356 0.2689 0.5203
70 0.0275 0.2431 0.4948
80 0.0165 0.1986 0.4475
90 0.0098 0.1623 0.4047
100 0.0059 0.1326 0.3660
110 0.0035 0.1083 0.3310</pre>[/QUOTE]Note: the valuation assumes that they payments are structured such that equity climbs evenly from 20% at 0, to 100% at 40, at 0.5% equity per year. A more realistic amortization lowers equity in the first third, but raises it in the last....