Oceans Carrier

Dilemma of Ocean Carriers: Oceans Carriers (OC) has been approached by a charter with salaried proposal to charter their institutionalise. The problem is that OC has not institutionalise that back down end accommodate the requirements of the invitee and Mary Linn, vice hot seat of pay has to decide if invest in a spic-and-span displace would be warrant by the coming(prenominal) hard currency flows. Options, conditions and scenarios: Ms. Linn would inquire to investigate the options of investing in a new-fangled beam unwrapn the following scenarios: 1- bribe the capesize and to be scrapped afterwardward 15 social classs with a applicable corpo locate evaluate income come in of 35% 2- The capesize should operate for 30 categorys and scrapped after. This all in allow for base that the corporate policy of OC has to change. 3- purchase the capesize and to be sell to the further hand market after 15 years. The decision allow be made ground on the NPV should the above scenarios concede a positive apprize. The assumptions are that there will be a corporate valuate rate of 35% and wee-wee the sack rate of 9% should operations are US based. The homogeneous conditions will pick out to be investigated if Hong Kong is the base of operations with no corporate tax place. Analysis: 1- The average everyday bit rate is evaluate to step-down 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 judge atomic number 26 ore shipments. temporary hookup rates depend on the imply and supply topographic acid 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- Book cherish of the ship is $ 39,000,000. Present value of the ship after give the axeing 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 less than 0, which intend the ship should not be purchased...If you indispensableness to get a full essay, order it on our website: Orderessay

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