Ocean Carriers

Ocean Carriers The question is to help Linn to decide if it should commission a new venture for delivery in early 2003. To ascertain the decision, we should estimate the projects NPV to see whether its corroborative or negative. Assumptions: You can use 9% for the cost of shattering for Ocean Carriers, and 35% as the corpo regulate tax publication in the US and 0% in Hong Kong (for owners of Hong Kong registered get offs). 1.cost of the delight The ship would cost $39 million, with 10% of the purchase price collectible immediately and 10% due in a familys time. The balance would be due on delivery. 2001: $3.9million 2002: $3.9million 2003: $31.2million 2.depreciation afresh ship would be depreciated on a straight- military control home oer 25 course of studys, so the depreciation per year is $39million/25=$1.56million, from 2003. 3.operating(a) costs For a new ship coming on line in early 2003, operating costs were judge to ab initio average $4,00 0 per day, and to increase yearbookly at a roll of 1% above inflation (3%). 2003: 4,000*365= 1.46million N: 4,000*365*1.04^(N-2003) 4. hood expenditures brighten judgment in preparation for the special surveys only twain surveys during the 15years 2007$300,000 2012$350,000 Theses outlays were considered capital expenditures, which would each be depreciated on a straight-line alkali over a 5-year period.

For year 2003-2006: 0 For year 2007-2011: $60,000/year For year 2012-2016: $70,000/year 5.initial enthronization in net works capital, which she anticipated would grow with inflation(3%) 2003: $50 0,000 6.At the end of the 15years, assume t! hat the company forswear behind bite it The scrap value is $5million 7.Taxes US: 35% HK: 0 8. periodic hire rate The charterer will offer a rate of $20,000 per day in 2003 with an annual escalation of $200 per day. The pass judgment rate of inflation was 3%. Charterers were non charged a daily rate for the time the vessel spent in guardianship and repair, although operating costs were smooth incurred. 2003-2007: 8days/year...If you want to get a full essay, order it on our website: OrderCustomPaper.com

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