Essay --

maritime Carriers Case ReportHunter TaylorCases in Financial Management2/25/2014Executive SummaryThe sea Carriers brand is looking into the lucrativeness and risk associated with purchasing a new capesize carrier for use in an initial three year lease. At the moment, Ocean Carriers does not pack any boats capable of meeting the size requirements that the lessee needs in ramble to fill their obligations. My analysis of this case brought the conclusion that there is no possible way to project the NPV of this project out of the red, or anywhere stopping point to where it needs to be considering the risk associated with the building, leasing, and maintenance of the boat. If any ship is to be built, which is not my overall suggestion, it should be built in Hong Kong where no task pass judgment is applied. This is the only situation where the NPV of the project is positive, yet by upright the slightest of margins. The Ocean Carriers company is responsible for determining if these small margins and NPV are charge the risk associated with this project. Scrapping at any year before or later on 25 age would be non-optimal. Although the NPV increases each projected year in each possible scenario, the life span of the carrier is not infinite, and the be associated with running the ship past 25 years far negate the increase in NPV.Assumptions & Problem StatementAs with any extrusion of future events, assumptions had to be made in order to make intelligent estimations. I used an expected 9% discount rate at 3% inflation per year. The working cap of the firm will climb up at this inflation rate and cash flows will be discounted at 9%. AnalysisScenario 1 Operate carrier for 25 years and scrap. This situation proved to be one of the least attractive options.... ...rease 15%Changing Cells Hire lay 20,000 21,000 22,000 23,000 Hire Rate 20,200 21,200 22,200 23,200 Hire R ate 20,400 21,400 22,400 23,400 Result Cells NPV 422,697 1,183,299 1,943,902 2,704,505 ConclusionIf any ship is to be built, which is not my overall suggestion it should be built in Hong Kong where no tax rate is applied. This is the only situation where the NPV of the project is positive, yet by just the slightest of margins. pursuance this recommendation would be the only scenario where Ocean Carriers sees a positive last(a) present value of the investment. Aside from this somewhat formidable option, it is my suggestion that Ocean Carriers neglect this project.