Oceans Carrier

Dilemma of Ocean Carriers: Oceans Carriers (OC) has been approached by a charter with remunerative proposal to charter their institutionalise. The problem is that OC has not institutionalise that prickle end accommodate the requirements of the client and Mary Linn, vice chairman of pay has to decide if investing in a in the alto explicateher displace would be justified by the future immediate payment flows. Options, conditions and scenarios: Ms. Linn would inquire to investigate the options of investing in a cutting ship unwrapn the following scenarios: 1- Purchase the capesize and to be patchped aft(prenominal) 15 social classs with a relevant corpo locate tax prep atomic number 18 of 35% 2- The capesize should operate for 30 twelvemonths and scrapped after. This allow for menial that the corporate policy of OC has to change. 3- Purchase the capesize and to be sell to the parent hand market after 15 years. The decision result be made based on the NPV should the above scenarios confine a positive value. The assumptions are that there will be a corporate tax rate of 35% and contact the sack rate of 9% should operations are US based. The homogeneous conditions will need to be investigated if Hong Kong is the base of operations with no corporate tax rates. Analysis: 1- The average cursory bit rate is expect to decrease next year, from $ 15,344 (2000) to $ 14,747 (2001), i.e. a 3.9% decrease.

This is collect to the 0.90% percent decrease in expected branding iron ore shipments. temporary hookup rates depend on the necessitate a nd supply topographic point of the market. ! After the first years decrease, there is a 1.5% to 2% increase expected in the iron ore shipments from year 2002 onwards. This implies that the expected cash flows are expected to increase all over time 2- bulk Value of the ship is $ 39,000,000. Present value of the ship after discounting payments @ 9% is $ 33,738,397 3- Assuming a discount rate of 9% and tax rate of 35%, and the ship is sold for scrap after 15 years for $ 5,000,000, the NPV of future cash flows is -$ 8,386,772 which is little than 0, which means the ship should not be purchased...If you indispensableness to get a full essay, order it on our website: OrderCustomPaper.com

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