Table 2. — Solutions to four survival problems in table 1; landings per vessel are random. 



Problem 



Year 



Marginal value 



of another vessel 



(dollars) 



Investment 

 m boats 

 (number) 



Boats owned 

 (number) 



Cash balance 

 (dollars) 



Debt to 

 gross asset 



the random variables are revealed, solutions to 

 two sets of problems were computed. In the first 

 set, the landing per vessel is random; whereas 

 in the second set, the price received is random 

 as well. The first set of results is presented in 

 Table 2, and the second set in Table 3. 



It is important to note that this application 

 of the survival model is not exhaustive of the 

 many that could be made, or to imply that the 

 normative results presented are likely to occur. 

 This work is only meant to indicate how an 

 investor interested in shrimp fishing, who has 

 a limited amount of money capital, might 

 obtain bench marks (from the model) for in- 

 vestment planning. 



Values of the Parameters 



In this application, the firm's initial fishing 

 capacity was specified to be one vessel in Prob- 



lems 1, 3, and 4. The values of the data (excluding 

 the basis for the expected shrimp price in the 

 first set of problems) are given in Table 1. The 

 initial purchase price of one vessel was taken 

 to be $100,000. In Problems 1, 3, and 4, the 

 firm is visualized as having an initial debt-free 

 investment of $100,000 with no savings. This 

 relatively large amount of initial equity was 

 necessary for the survival problem to have a 

 feasible solution. The minimum value for the 

 firm's initial equity in Problem 1 was found 

 to be $97,000. 



In Problem 2, where the entrepreneur has 

 his equity in savings rather than invested in 

 fishing capacity, the initial value for savings is 

 $96,145. This is approximately equivalent to 

 owning one vessel initially because of the pro- 

 cedure used to calculate interest earnings and 

 tax allowances in the model. 



There is only one money account in the model, 

 and accordingly one interest rate. This rate was 

 specified to be 8 1/2% per year. 



116 



