Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : Strictly: Drilling and oil-field services -- Ignore unavailable to you. Want to Upgrade?

To: Big Dog who wrote (16792)	3/27/1998 1:52:00 AM
From: Czechsinthemail	Read Replies (1) \| Respond to of 95453

Big Dog, Thanks for the information on capital recovery factors. You said that jackups have a more attractive capital factor. Do jackups and floaters have similar or different life expectancies? I was trying to get a long-term picture of the profit potential of jackup vs. floater construction, and I would imagine if one or the other had a longer useful life after recovering the invested capital that would be a big plus. Baird

To: Big Dog who wrote (16792)	3/27/1998 2:13:00 AM
From: Chuzzlewit	Respond to of 95453

Big Dog, an interesting analysis and a good shorthand method that can be used to justify any capital investment -- cash on cash. For any of you out there interested in this methodology it is detailed in Grant and Iverson's "Engineering Economy". The usual way of doing this kind of thing is to calculate the net annual cash flow (incluing taxes) for each year over the lifetime of the investment (not the lifetime of the lease) including the costs for repair and maintenance. You then calculate the implied rate of return (IRR). Alternatively you calculate the NPV of the project using the appropriate hurdle rate. Regards, Paul