Case Study Morgan Stanley

In January 2001, Mary Linn, Vice President of Finance of ocean Carriers, a ravishping company with offices in New York and Hong Kong, was evaluating a proposed operate of a ship for a triple twelvemonth period, solution in early 2003. The customer was eager to take prow the contract to meet his own commitments and offered a very spellbinding call. No ship in ocean Carriers current fleet met the customers requirements. Linn, therefore, had to decide whether oceanic Carriers should immediately purchase a new-fashioned capesize carrier (a salient lode ship) that would be completed two years therefrom and could be involved to the customers. However, the proposed contract with the customer is only for three years. Therefore, after the three years, the ship will have to be leased for other customers. It is Linns responsibility to decide if future(a) market conditions warranted a delibe enjoinable investment in the new ship. The objective of this case locate is to estimate the net empower value of the investment in the new capesize carrier. The customer of Ocean Carriers who charters a vessel even out a daily let outrank for the entire continuance of the contract. Thus, the daily hire rate as sanitary as the number of days the ship is chartered determine the taxation from the ship. To examine the viability of the investment, it is important to consider the possible daily hire rate as well as the demand for much(prenominal) vessels. Since the daily hire rate is determined by the tag on and the demand for such services, we source take a facet at the supply of Capesize vessels.Future supply of the capesize vessels is the sum of current vessels, deduction the vessels that will be scraped, cocksure new ships delivered. show up 2 shows the existing capesize carriers in terms of the sum of the loading capacity. (See Exhibit 2 of your case study note) There are 2 million tones of capesize with the age oer 24 year s. We can take care that these old vessel! s would be in short scrapped, which in wind would reduce the supply of the capesize...If you want to prevail a enough essay, order it on our website: OrderCustomPaper.com

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