Date Ship Name Ship Type DWT Year Built Age at Sale Gear Purchase Price Mar-07 Martha Verity Capesize 158.0 1995 12 gearless $63.0 May-07 Ingenious Capesize 170.0 1996 11 gearless $64.2 Nov-07 Sumihou Capesize 171.1 1996 11 gearless $106.0 Mar-08 Cape Sun Capesize 171.7 1999 9 gearless $135.0 May-08 Bet Performer Capesize 172.1 1997 11 gearless $133.0 Jul-08 Coppersmith Capesize 149.7 1995 13 gearless $101.0 2. How much was the Golden Wing worth in January 2009
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average. 3. Should Ms. Linn purchase the $39M capesize? Make two different assumptions. First‚ assume that Ocean Carriers is a US 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 are also exempted from paying any tax on profit made on cargo uplifted from Hong Kong. No‚ Ms. Linn should not purchase a $39M capesize assuming the firm is subject to 35% taxation.
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····························3 Alternative································5 Decision summary··························5 Appendix Ocean Carrier Case Study * Case Background Mary Linn of Ocean Carriers is evaluating the purchase of a new capesize carrier for a 3-year lease proposed by a motivated customer. The leasing contract offers very attractive terms‚ but no ship in Ocean Carrier’s current fleet meets the customer’s needs. In addition‚ the proposed contract with the customer is only
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period‚ beginning in early 2003. The terms are very attractive but we currently do not have a ship that meets this customer’s needs. Ms. Linn has asked Group 4 to research three proposed scenarios to determine whether or not commissioning a new capesize carrier for this customer will be in the best interests of the company. The following are our findings and recommendations: Background Daily spot hire rates are expected to decrease over the next year because the iron ore shipments are expected
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In addition to the number of vessels‚ market demand in basic industries like iron ore‚ changes in trade patterns‚ and age of vessels are all factors that drive daily hire rates. 3. How would you characterize the long-term prospects of the capesize dry bulk industry? The long-term the dry bulk industry is expected to grow. Prospects for growth from 1994-2000 on average are +2.3%. The projections on exhibit 6 trend toward +1.5% y/y increase‚ which are in-line with data from previous years
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coal. OCI has offices located in New York and Hongkong. One of OCI’s customer’s is keen in committing for a 3 year lease starting from 2003 for a large dry bulk Capesize carrier of capacity 180‚000 DWT in order to fulfil its own interests. There is a potential opportunity for OCI to expand its current fleet with an addition of a large Capesize vessel. Most of OCI’s current fleet had been already leased‚ beginning from 2003. Looking at the feasibility and future market beyond 2006‚ it was very important
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COAL By definition coal is a fossil fuel formed by plants and animal buried years ago‚ this formation facilitated by the high temperature and pressure underground. This mineral can be used as a solid fuel and as a raw material for coke and gas. After this lengthy process of formulation coal is recognized as a significant factor of the world’s manufacturing sector. As this is so‚ there is a global demand for this commodity. Ship being the suitable mode of transportation for this commodity‚
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of the capesize dry bulk industry? 2. How much is the cost of a new vessel in present value terms? Compared to the book value of the ship of $39M‚ what can you conclude about the effect of the installment payments? 3. Should Ms. Linn purchase the capesize carrier? Assume that it is going to be sold for scrap after 15 years. [Hint: Construct the Free Cash Flows of the project.] 4. Does your conclusion in (3) change if you instead assume that Ocean Carriers operates the capesize for the
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overseas and are also exempted from paying any tax on profit made on cargo uplifted from Hong Kong‚ i.e.‚ assume a zero tax rate. The investment is not viable from the finance perspective. According to the analysis‚ Linn should not purchase the Capesize. After 15 years‚ Linn will suffer a loss on in both the U.S and Hong Kong. After 20 years‚ Linn will still lose money in both locations‚ albeit less money. Finally‚ in the 25-year analysis‚ Linn will be able to turn a small profit in Hong Kong while
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Executive Summary This report will show the methodology‚ analysis‚ concerns and final solution to the proposed problem of pricing the Bet Performer‚ a capesize bulk carrier. The Bet Performer is an 11 year old vessel‚ featuring 172‚000 deadweight ton capacity‚ originally built by Nihon Kokan Kabushiki-Kaisha of Japan. The most recent sale of this ship occurred in 2006 for $70 million. After a series of regression analyses including a multiple regression analysis accounting for the recent rise in
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