Ocean Carrier Case Solutions Essay Daily spot hire rates are determined according to supply and demand of the shipping capacity. Our report is not only to assist Ms. Whilst caution is necessary in asserting that we have entered a new period of strong market prices after two decades of price decreases, it is becoming increasingly clear that structural factors like the growth in global food demand can be reasonably expected to maintain prices at sustained levels over the medium-term, though substantially below the most recent price hikes except in the case of maize. It is in an evaluation process for a lease proposal from a client for which Marry Lin, Vice President needs an analysis of profitability and capital budgeting for the purchase of a new cargo ship to meet the client requirement as none of the existing fleet ships are available or suitable to client specifications. The iron ore shipment imports stay relatively the same amount, so we expect the daily spot rates to decrease over the next few years.
Currently, no ships in Ocean Carrier's fleet meet the requirements of the customer. The detail calculation is attached in the appendix and the methodology of this approach is enlisted as below. Also there is an expected increase in demand for capsize vessels considering the probable exports arising from Australia and India starting in 2003. . Cash flow, Future value, Internal rate of return 1283 Words 9 Pages Cash Flows and Their Relevance Cash flows refer to both the inflows and outflows of cash during a defined period by a company or corporation and are linked to the business as a whole or a specific capital project. Earth, Geology, Global warming 912 Words 2 Pages.
The Net Present Value on the Ocean Carrier is not a positive number, a clear indicator that buying the vessels is not a good idea. This case provides the opportunity to make a capital budgeting decision by using discounted cash flow analysis to make an investment and corporate policy decision. Technological developments such as 3D printers and iCloud are possible substitution methods. What factors drive average daily hire rates? How would you characterize the long-term prospects of the capesize dry bulk industry? Fish, Human, Meaning of life 698 Words 3 Pages Scenario A. Assumption about the risk of the charterer In this case, we consider the risk that the charterer would stop paying before the end of the contract or terminate the contract early is 0.
Due to their size, Capesize carriers must sail around Cape Horn in order to travel between the Atlantic and Pacifica Oceans — the ships are too large to utilize the Panama Canal. There are no fixed costs. Finally, operating costs can also influence the daily hire rate. The customer would begin utilizing the ship in 2003. Internal rate of return of the project also increased significantly to 10. This means Ocean Carriers will have to make some changes in order to accept this project.
Ocean Carriers is expected to grow at 2% from 2002 to 2004, then growth is expected to fall to 1. However, the company does not currently have any capesize carriers in their fleet that meets the customer's requirements. They also need to find a way to extend the life of their ships to take advantage of cash flows that could be received past 15 years. The examination of supply and demand depicts that daily hire spot rates would be declining in 2001. The park houses fourteen rides, an assortment of aquariums, a giant panda exhibit, observatories and educational laboratories. The conditions for the proposed lease are shown in exhibit 1.
Its Major sources of cash were provided by operating major uses of cash? These costs incurred a straight-line depreciation. It is operating in the positive or negative and how much work will need to be done if it is not positive. What do you think of the company's policy of not operating ships over 15 years old? Please register at the Harvard Business Publishing website with a student account. Ans: Yes, I agree with this decision if Ocean Spray able to maintain their focus on their core competency while allowing. The requirement for the cape-size is predicted being strong due to strong curiosity about primary cargo - iron ore and coal - Australia wide and India.
What do you expect to happen to demand relative to supply over the next four or five years? The factors that drive average daily hire rates are the age of vessels, market condition. What do you think of the company's policy of not operating ships over 15 years. Ocean Carriers is a shipping company evaluating a proposed lease. In order to get a more detailed understanding of the various calculations, the reader of this analysis is welcome to have. For example, if the distance between the supply and the destination increased for iron ore, demand for capesizes would also increase.
I am writing this you this memorandum to inform you of my recommendation as to whether to accept the audit engagement of Ocean Manufacturing, Inc. The forecasted trend about daily spot hire rate in 2002 According to the information provided by Exhibit 3, Exhibit 5 and Exhibit 6, we use two ways to analyze whether the daily spot rate will increase or decrease next year. Having ample cash on hand will ensure that creditors, employees and others. First, there are 63 new vessels scheduled for delivery in 2001 to increase the supply of vessel and only few old vessels need to be retired, while the demand will not increase because imports of iron ore and coal would remain stagnant over next two years. Please place the order on the website to get your own originally done case solution.
Do you expect the daily spot hire rates to increase or decrease next year? I propose that Ocean Carriers moves headquarters from the United Sates to Hong Kong in order to benefit from not paying taxes on income. Over 85% of the cargo on these capesizes are iron ore and coal, and demand for these products increases in a strong economy. In January 2001, the vice president of finance for Ocean Carriers was evaluating a contract proposal. Do you expect daily spot rate to increase or decrease next year? Traditionally, when charter rates rise, spot hire rates will increase even higher than charter rates. Cash flow, Depreciation, Discounted cash flow 992 Words 2 Pages reflect the true value of JetBlue. Per the case, technological developments in ship construction play a role in capacity, as newer ships are bigger, faster, and more fuel efficient, increasing the overall shipping capacity of a fleet.