ABSTRACT

Shipping companies are present in various sizes and organization types; however, their main purpose is always to provide maritime transport services. Ships are their main assets. The acquisition of ship is connected to the occurrence of capital costs, regardless of the ship they buy (new or second hand) or the method of financing. Capital costs and costs of capital are not the same; however, the acquisition of the ship always bears some costs of capital as well. Ship’s acquisition can be equity or debt financed. If financed by the bank loan, which is the most common way of ship financing, several methods are possible, eg. equal installments, equal principal, both with or without grace period, bullet payment etc. This affects the final price of the ship. Capital investments are linked to the concept of depreciation. Ships, like many other assets, lose their value with aging and use. There are many options of depreciation calculations. Usually straight line depreciation is used, but also some accelerated depreciation methods can be found in shipping. Depreciation provides information on book value of the asset over time; however, in the shipping industry the real value is market dictated and huge differences between book value and real value usually occur.