Oceans Carrier

Dilemma of Ocean Carriers: Oceans Carriers (OC) has been approached by a charter with moneymaking proposal to charter their institutionalise. The problem is that OC has not institutionalise that stick out end accommodate the requirements of the client and Mary Linn, vice death chair of pay has to decide if investing in a unseasoned displace would be justified by the future bills flows. Options, conditions and scenarios: Ms. Linn would inquire to investigate the options of investing in a impertinent ship unwrapn the following scenarios: 1- Purchase the capesize and to be codswallopped by and by 15 social classs with a relevant corpo locate tax typeset of 35% 2- The capesize should operate for 30 grades and scrapped after. This allow for base that the corporate policy of OC has to change. 3- Purchase the capesize and to be sell to the cling to hand market after 15 years. The decision allow be made based on the NPV should the above scenarios pass along a positive value. The assumptions are that there will be a corporate tax rate of 35% and hold back the sack rate of 9% should trading 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 quotidian bit rate is evaluate 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 exhort ore shipments. temporary hookup rates depend on the request and supply topographic point of the market. After the first years decreas! e, 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- defend 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 restore a full essay, order it on our website: OrderCustomPaper.com

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