1. How would you characterize the long term prospects of this business (the capsize dry bulk industry) - going up or going down? Strong or weak? Give specific reasons why.
2. For the last tab, make any adjustments to any part of the forecast and free cash flows projection, including adjusting any of the input values, to optimize the IRR and NPV of the boat. However, your adjustments or changes must be logical and possible, given the facts you have in the case, and your general knowledge of the market and situation involved.
List below what you changed, and why you feel it is logically possible in this situation, and why this is the best possibility.
3. What about the third tab and your solution, which is a 15 year boat life and a 0% tax rate by operating in Hong Kong? Does this look like a good possibility? Why or why not?
4. Based on your analysis, would you recommend that the $39 million capsize be bought? Why or why not?
5. What do you think of the company's policy not to operate ships over 15 years old?
6. What about the second tab and your solution, which is a 25 year boat life and a 0% tax rate by operating in Hong Kong? Does this look like a good possibility? Why or why not?
7. The case includes computing the IRR and NPV for Ocean Carriers when taxes were 35% (in the United States) and the boat life was 25 years. Prepare on the labeled tabs of the spreadsheet the four different scenarios asked for.
You will need to change input values and possibly the structure of the forecast and free cash flow analysis for each tab. You should turn in each of your computations done on the separate tabs of the spreadsheet. Those tabs have the lab solution on them as a starting template for computing these other questions and creating the other tabs. YOU NEED TO CHANGE THE ASSUMPTIONS IN THE SPREADSHEETS - it is not done for you, since each one is still the lab situation of 35% taxes and a 25 year boat life.
What is your analysis of the first tab as a possibility for the company - it is the situation of a 15 year boat life, and a 35% tax rate? Does this look like a good possibility? Why or why not?
Attachment:- B301 Ocean Carriers Case Solutions.xlsx