The comparison of alternative investments in the shipping industry
Diakomihalis, Mihail N.
This paper addresses an evaluation of alternative investments problem, faced
by shipping companies. A study of comparison of the economic values of the alternatives is
necessary for the enterprises. The methods of Alternative Investments evaluation that should
be used are the Net Present Value, the Internal Rate of Return, the Incremental analysis, the
Benefit Cost ratio and the Cost per ton of cargo ratio. These methods are presented in the
paper, after they have been analyzed and adjusted to meet the requirements and the
circumstances of the shipping industry. They are insisted to be applied for evaluating
investment proposals in shipping. The Alternative Investments’ comparison study is
indispensable, not only for the selection among several investment plans, but also for assets’
replacement. According to the specific problem, one or more of the proposed methods may be
used, to aid the final decision of the shipowner or the prospect investor.