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Pages 33-44

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From page 33...
... 25 Appendix C OWNERSHIP AND OPERATING MODELS The first consideration with regard to the lease–purchase and ownership decision for the U.S. Coast Guard (USCG)
From page 34...
... 26 As suggested in the 1999 GAO report, long-term leasing under more detailed guidelines can make the option less cost-effective. Current guidelines from the Office of Management and Budget (OMB)
From page 35...
... 27 25 years. With changes in the tax laws, leases can now include a fixed end-of-lease purchase price.
From page 37...
... 29 TABLE C-1 WACC Parameters, Values, and Sources Parameter Value Source rD 4.68% U.S. Department of the Treasury, 30-year high quality market corporate bond spot rate, from Federal Reserve Economic Data, Federal Reserve Bank of Saint Louis D/V 0.80 Committee member expertise with leveraged lease financing.
From page 38...
... 30 The basic calculations between columns in Table C-3 are described as follows. Calculations cover the 30-year asset life unless noted otherwise.
From page 39...
... 31 Year 31 -- scrap value = $2,330,000. Column B Years 1 to 11 -- MACRS % depreciation.
From page 40...
... 32 Column M Present value of lease = bareboat less tax, net government cash flow (Column L)
From page 41...
... 33 analysis, including tax payments by the lessor to the U.S. Treasury, and OMB's 2.8 percent discount rate)
From page 42...
... 34 committee is aware of the sale of only one vessel in the past 10 years that could be considered a polar icebreaker (the Botnica) , but it has insufficient power to break out McMurdo.24 Operating Costs of the Various Manning Models As stated previously, the manning model is not dependent on the lease-versus-buy decision.
From page 43...
... 35 TABLE C-4 Comparison of Alternative Crewing Models Crew Type Commercial Commercial USCG USCG Manning basis MSC modela Jones Act tankerb Lower crewing model PIBc Higher crewing model PIBd Billets 31 21–25 60 120 Cost per day ($) 20,500–28,000 12,000–17,000 17,721 28,800 Annual cost ($ millions)
From page 44...
... 36 • USCG cutters must be manned by USCG crews to perform their missions, which rules out privately crewed USCG vessels. • The options for crewing of a vessel for the breaking out of McMurdo Station depend on the crew size that USCG determines to be necessary for the polar icebreakers.

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