course project case analysis financial management
The Ocean Carriers Case presents a shipping company evaluating a proposed lease of a ship for a three-year period. The proposed leasing contract offers very attractive terms, but no ship in Ocean Carrier’s current fleet meets the customer’s requirements. The firm must decide if future expected cash flows warrant the considerable investment in a new ship.
- Write an 8-10 page case analysis for the Ocean Carriers case.
- As you complete your analysis, you should address and answer the following questions:
- Do you expect daily spot hire rates to increase or decrease next year?
- What factors drive average daily hire rates?
- How would you characterize the long-term prospects of the capesize dry bulk industry?
- Should Ms. Linn purchase the $39M capesize? Make two different assumption. First, assume that Ocean Carriers is a U.S. firm subject to 35% taxation. Second, assume that Ocean Carriers is located in Hong Kong, where owners of Hong Kong ships are not required to pay any tax on profits made overseas, and where they are exempted from paying any tax on profit made on cargo uplifted from Hong Kong.
- What do you think of the company’s policy of not operating ships over 15 years old?
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