Ocean Carriers Essay Example for Free

Ocean Carriers EssayIron ore and coal imports will most probably decrease the upcoming year With the increasing total of vessels should result in a market surplus By creating this surplus, prices will be driven down, since we will have limited demand and suppliers competingAverage daily rates, based on historical numbers, have a direct relationship with the number of shipments.Only Accept the project if we sell after 25 geezerhood in a tax free environment Reject all of the following sell after 15 eld in both a tax and tax free environment, also after 25 years with a tax environmentThe longer the wait to sell the betterHow longsighted Should Vessels Operate?The companys current policy is to not operate ships older then 15 years old If Ocean Carrier operates for 25 years the NPV will be higher then if they operate for 15 years and sell the scrap metal (,368,557 vs. $2,238,411) The present value of the future exchange flows exceeds the value of selling the scrap metal 10 yea rs earlier. Hence there is greater value operating the vessel for an additional 10 years/Iron and coals demand is expected to increase annually and the charter rates are expected to increase by annually for the support of the vessel. The company can generate more income if they decide to operate the ship for an additional 10 years.