The Ocean Carriers Case
Your assignment is to provide a written analysis of the case. Keep in mind the rules for group assignments from the syllabus. We will discuss the case in class as indicated in the syllabus. All team members should be knowledgeable about the facts of the assigned case, as I will randomly solicit discussion from class members.
Ocean Carriers uses a 9% discount rate.
While dealing with the decision problem at hand, your report should address the following questions: 1.
Do you expect daily spot hire rates to increase or decrease next year?
What factors drive average daily hire rates?
How would you characterize the long-term prospects of the capsize dry bulk industry?
Should Ms Linn purchase the $39M capsize? Make 2 different assumptions. First, assume that Ocean Carriers is a U.S. 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.
5. What do you think of the company’s policy of not operating ships over 15 years old?
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30017 Corporate Finance
Guidelines for your case write-up:
What follows is a pretty exhaustive outline for case preparation. You are likely to work on plenty of cases while at Bocconi and may already have done so. I have found that this detailed outline steers students towards the right approach and outcome.
1. Read cases carefully and analyze all statistical data. It may be useful to read the case two, three or more times if necessary. Most cases are short, but loaded with relevant facts.
2. Determine the major problem or problems involved in the case.
3. With the problem(s) in mind, think about and search for alternative courses of action that are feasible. Extra research may be