Discussion questions: (Ocean Carriers)

Ocean Carrier uses a 9% discount rate.

1. Do you expect daily spot rates to increase or decrease next year?

2. What factors drive average daily rates?

3. How would you characterize the long-term prospects of the capesize dry bulk industry?

4. Should Ms. Linn purchase the $39M capesize? Make two 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 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?

Attachment:- Exhibits.rar