25 JUNE 2026 2. Income Approach The income approach is highly relevant for income-pro- ducing passenger vessels such as ferries on contracted routes, excursion operators, or dinner/cruise businesses. It values the vessel based on the present value of its anticipat- ed future economic benefits. Two main techniques are used: • Direct capitalization: Stabilized net operating income (NOI) divided by a capitalization rate derived from market transactions. • Discounted cash flow (DCF): Projecting detailed cash flows (revenues from tickets, food/beverage, charters minus operating expenses, maintenance, crew, fuel, insurance, and docking fees) over the vessel’s remaining economic life, then discounting to present value using an appropriate rate that reflects risk. A terminal or residual (salvage) value is added at the end. For passenger vessels, revenue drivers include passenger counts, ticket pricing, ancillary sales, charter utilization, and seasonality. Expenses must reflect Coast Guard man- ning requirements, regulatory compliance costs, and fuel volatility. Long-term charters or contracts (common for some ferries) provide more stable projections. Key considerations: • Market-specific demand (tourism trends, commuting patterns, competition from bridges or other transport). • Regulatory risks (e.g., potential changes in cabotage under Jones Act for U.S.-flag vessels). • Remaining useful life, influenced by operating usage, maintenance, and technological obsolescence. USPAP requires clear disclosure of assumptions, such as projected occupancy rates or discount rates (often From 6 to 200kW Available with or without enclosures 6 to 200kW For global support, contact John McKinnon at 770-601-6880 or john.mckinnon@kohler.com Available from 20 to 175kW Available 6 to 200kW Available 6 to 200kW *Products shown are not to scale Kohler Marine is now
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