The Port Authority of Biloxi, Mississippi is the fourth busiest port in the Gulf of Mexico. It is an Enterprise Agency of the State of Mississippi. That means that, while The Port Authority is a separate corporation, and is expected to operate at a minimum of break‐even or a slight profit, it is wholly owned by the state of Mississippi (since 1962). On average, the port operates 50 weeks per year (allowing 2 weeks for holidays and inclement weather when work does not occur). Enterprise Agencies may be started by the Federal Government, states, or municipalities. One of the benefits of creating an enterprise agency is that it is less susceptible to political interference from the sponsoring political organization and its politicians. The agency could be started to as a means of achieving some objective (such as promoting and/or maintaining a commercial port within the state of Mississippi). One of the added benefits of an enterprise agency is that the agency is tax‐exempt from federal, state, local, and sales taxes. The Port Authority of Biloxi is a bulk (anything from grains to fresh fruits and vegetables), break‐bulk (a.k.a. general merchandise), and container seaport. It has 4 wharfs that can accommodate up to 20 cargo ships at a time. It currently has a gantry crane on a rail system that services one of the wharfs. The other three wharfs are currently serviced by several forklifts that unload the cargo ships. The forklifts were all purchased several years ago. Unfortunately, the forklifts are now breaking down frequently, requiring expensive repairs, and are in need of being replaced. The Port Authority is considering two options for replacing the aging forklifts. The first option would be to replace the existing forklifts with new forklifts. The second option would be to purchase two mobile harbor cranes that could service the other three wharfs, eliminating the need for forklifts. Currently the Port utilizes 12 forklifts. Forklift operators are unionized, and including benefits cost an average of $40 per hour per operator. Fuel averages 2 gallons per hour of use, with each forklift being used approximately 12 hours per day, five days per week. Cargo ships and/or the customer shipping goods through the port are currently charged $75 per hour per forklift. Because of technological advances, the new forklifts would be able to handle more weight per “lift,” so the Port administration anticipates purchasing only 10 new forklifts, with each forklift costing $50,000. Technological advances in engine efficiency will allow the new forklifts to use 1.5 gallons of fuel per hour instead of 2. The forklifts are expected to last 10 years with no salvage value at the end of that period. The forklifts will be depreciated using straight‐line depreciation. Repairs and maintenance cost for the forklifts are anticipated to be:
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