Memorandum To: CEO, Ocean Carriers Re: Ocean Carriers Capital Budgeting Mary Linn, Vice President of Finance, has been approached by a potential customer with a proposed lease of a ship for a three-year 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 to decrease while fleet …show more content…
Option 3: Sell the Carrier on the Second Hand Market After 15 Years If the company chooses to sell the carrier on the second hand market after 15 years, the selling price should be $11,343,760 (please see Table 5 for calculations). This selling price is equal to the NPV of the last ten years. (From 16th year to 25th year). A buyer would only can accept the selling price that makes their NPV positive. Because we assume that the buyer has the same daily hire rate, operating costs, depreciation, tax rate, and working capital requirements as Ocean Carrier we can also assume that the buyer’s NPV is same as the Ocean Carriers’ NPV of the last ten years. Another facet, from Ocean Carriers’ perspective, is that the selling price should be greater than the gain from continuing to operate the carrier. It should be noted that the zero time for computing the NPV is 15th year, not the first year, because the selling is happened in the end of the 15th year. For the same reason, the net working capital should also start from the 15th year. Attachments (10): Exhibit 1: Capital Expenditures Anticipated in Preparation for Special Surveys Exhibit 2: Capesize fleet by age category as of December 2000 Exhibit 3: Current order book for dry bulk capesizes by delivery date Exhibit 4: Daily hire rate adjustment factor for dry bulk capesizes based on age of vessel Exhibit 5: Worldwide iron ore vessel shipments, fleet size and average
The facts in this case are that Harvey Pierce ambushed and shot Robin Kerl and her fiancé David Jones in the parking lot of a Madison Wal-Mart where Kerl and Jones worked. Kerl was seriously injured in the shooting, and Jones was killed. Pierce, who was Kerl’s former boyfriend, then shot and killed himself. At the time of the shooting, Pierce was a work-release inmate at the Dane County jail who was employed at a nearby Arby’s restaurant operated by Dennis Rasmussen, INC. Pierce had left work without permission at the time of the attempted murder and murder/suicide. Kerl and Jones’ estate sued DRI and Arby’s, INC. As in pertinent to this appeal, the plaintiffs alleged
There is no question that the Vital Spark needs an overhaul soon. However, Mr. Handy feels it unwise to proceed without also considering the purchase of a new vessel. Cohn and Doyle, Inc., a Wisconsin shipyard, has approached NETCO with a design incorporating a Kort nozzle, extensively automated navigation and power control systems, and much more comfortable accommodations for the crew. Estimated annual operating costs of the new vessel are:
The Data that has been collected, read, and analysis was to determine Miguel’s strengths and challenges (weaknesses). According to Miguel’s Data his strengths are Phonemic Awareness, Phonics, and Vocabulary. In the phonemic awareness: The student is scoring very well in phonemic awareness/oral language. He was able to get 10 out of 10 in sounding out words. He was also able to
Since scenario 1 has a negative NPV, we recommend Ocean Carriers to not invest if there is a 35% tax rate in the US. In scenario 2, where the ship is built in HK with a 0% tax rate, then we recommend that Ocean Carrier invest in the ship. This analysis shows that working the ship at a 35% tax rate will not yield a profit on the investment even 25 years into the future, given the increasing costs of survey preparation and the diminishing number of days that the ship is actually able to make money and be commissioned.
Mark volunteered to help with the community arts festival; he was supporting the not-for-profit organization as he had in the past. However, he did not know his good intentions as a volunteer would cost him his job as an assistant manager. The retail store’s phone number was printed in the festival advertising in error and ticket requests overloaded the phone lines, causing loss of business and annoyed the store manager. As a result, Mark was seen as the cause of the problems and terminated.
(NSY) had been providing parts and services to the Mega-Yacht Industry since receiving their initial seed capital in 2000. The Mega-Yacht industry provided an attractive opportunity for NSY. Although the industry was small by comparison, serving only 10,000 vessels, it generated in excess of $1 billion in economic activity annually, divvied amongst the new build, and maintenance, refit and repair business sectors (Mark & Mitchell, 2003, p. 48). The industry’s supporting cast included captains and crews, owners, management companies, procurement agents, yacht builders and repair entities, brokers, and local husbanding agents. Although unknown to the firm at its inception, consultants in 2002 forecasted the mega-yacht industry would see annual growth of 6%, with the potential for even better numbers in the short-term (Mark & Mitchell, 2003, p. 48).
If the company is incorporated in the U.S., the NPV will be $-7,836,500.07(US25) after 25 years and will be $-6,395,945.22(US30) after 30 years. Therefore, the U.S. company should not purchase the vessel. If the company is established in Hong Kong, the NPV will be $1,522,472.92(25HK) after 25 years and will be $3,402,293.81(30HK) after 30 years. Therefore the 30 years should be the optimal number of years to operate the carrier before scrapping it after 30 years. In this situation, if the 15-year-selling policy is changed, the company should buy the carrier. For years 26-30, we assume that average daily charter rate is increased by $200 per year. The expected daily hire rate is calculated by multiplying Avg. Daily Charter Rate by adjustment factor for hire rate of 65%.
Question #1: Evaluate the conduct of Peter Lewiston against the EEOC’s definition of sexual harassment.
Perhaps the easiest approach to the acquisition of BoatU.S. is to leave BoatU.S.’s current demand and forecast planning untouched and separate from West Marine’s planning processes. This would be inexpensive and non-disruptive to the current corporate culture. The drawbacks, however, could be a slow steady decline in profitability and reliability of the BoatU.S. brand, hence the reason for the acquisition in the first place.
Ocean Carriers Inc. was approached in January of 2001 with a contract proposal for the leasing of one of their ships for a term of 3 years beginning in 2003. Ocean Carriers currently has no ship to accommodate the customer. To commission the construction of a new vessel would take 2 years from start to completion. The average rate in the spot market is $22,000 per day. Ocean Carriers deployed a younger fleet than average carriers and generally earned a 15% premium over the average daily rate placing them in position to capitalize in strong economies. However, the industry is volatile and suseptable to extremes both low and high. Many ship owners sought to sign contracts with time charters in order to shield themselves from the swings
The business world is highly competitive, changes quickly and is filled with risks and rewards. The international business world is no different! Things can change on the international stage in the time it takes to get a cup of tea! S&S Air has been in discussions with a dealer in Europe to sell the company’s model known as “The Eagle”. The dealer, Amalie Diefenbaker, has told S&S Air that she will pay the company €60,000 (€, Euro) per plane. She will order 15 planes a month and will pay for all 15 planes within 90 days; the intention would be to continue to order 15 planes each month. S&S Air is confident that they
An aircraft is one of the most important aspects in the success of the aviation industry since airlines cannot operate without it. Considering that there are many advantages and disadvantages of old and new aircraft, many airlines have difficulty when it comes to deciding whether to buy a brand-new aircraft or just use an old one. That critical decision will be the starting point of either the success or failure of an airline operation. According to Wyndham (2015), there are two significant areas in arriving at the purchase decision: looking at the full life cycle cost of owning and operating the aircraft.
A shipping pool enjoys several benefits. Besides the ability to undertake large contracts of affreightment, the pool can diversify risks and enjoy economies of scope. With higher load factors and the ability to minimise ballast legs and idle time, a pool can benefit from a semi-industrial carrier model for long-term relationships and fulfilment of contracts. Downsides of a shipping pool are issues with regulatory agencies, no control of tonnage, reliance on third parties, market risks, and speculative activity.
such change. Previously Cordia was a Council department. In 2009 Direct and Care became a Limited Liability
Every firm would love to invest in shipping industry due to large profits involved. However this would seem easy but practically it is lot more difficult and virtually impossible to establish in container line business. The problem pertains to large capital investments in form of vessel and container procurements and risk of operating vessels. Even if we take the examples of biggest companies