Considerations of return on capital investment and payment on progress in the defense shipbuilding industry
Ames, Richard Earl
Maxon, Bruce Ethan
Coady, Philip James
Kline, Melvin B.
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The thesis considers the impact of return on investment, progress payments, and cash flow in the shipbuilding industry. Analysis is devoted to the progress payment method recommended by the Navy Task Group to Study Shipbuilding Progress Payments. An examination is made of both Government profit policy and contract financing as they relate to the shipbuilding industry. A computer model was developed which makes explicit the discounted cash flow in a given contract and displays all government payments to the contractor as well as the contractor's share of contract financing. The time-adjusted rate of return which is implied by the terms and conditions of the contract is computed by the model. A decision process for computing a profit negotiation position is developed which integrates (1) the IAC profit computation system, (2) the proposed shipbuilding progress payment method, and (3) the prevailing market conditions.
Distinguished Alumni Award Program author. RDML Philip J. Coady Jr.USN (Ret) (Presented 27 Mar 06)
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