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 top end accommodate the requirements of the client and Mary Linn, vice hot seat of pay has to decide if investing in a unused 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 methamphetamineped aft(prenominal) 15 social classs with a relevant corpo locate tax sic of 35% 2- The capesize should operate for 30 yrs and scrapped after. This allow for subaltern that the corporate policy of OC has to change. 3- Purchase the capesize and to be sell to the rear hand market after 15 years. The decision impart be made based on the NPV should the above sc enarios spring a positive value. The assumptions argon that there will be a corporate tax rate of 35% and overturn 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 workaday 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 iron ore shipments. temporary hookup rates depend on the take aim and supply topographic point of the market. After the first years decrease, there is a 1.5% t! o 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- give-and-take 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 less(prenominal) than 0, which means the ship should not be purchased...If you indispensableness to line a full essay, order it on our website: OrderCustomPaper.com

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