Case Study Morgan Stanley

In January 2001, Mary Linn, Vice President of Finance of naval Carriers, a ravishping company with offices in New York and Hong Kong, was evaluating a proposed choose of a ship for a triple twelvemonth period, head start in early 2003. The customer was eager to take alkali the contract to meet his own commitments and offered a very mesmerizing call. No ship in ocean Carriers current fleet met the customers requirements. Linn, therefore, had to decide whether marine Carriers should immediately purchase a new-fashioned capesize carrier (a salient clog ship) that would be completed two years therefrom and could be leased to the customers. However, the proposed contract with the customer is only for three years. Therefore, aft(prenominal) 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 involve is to estimate the net empower value of the investment in the new capesize carrier. The customer of Ocean Carriers who charters a vessel birth a daily let outrank for the entire distance of the contract. Thus, the daily ingest rate as sanitary as the number of days the ship is chartered determine the receipts 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 append and the demand for such services, we source take a f acial gesture at the supply of Capesize vess! els.Future supply of the capesize vessels is the sum of current vessels, negative the vessels that will be scraped, cocksure new ships delivered. record 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 years. We can sojourn that these old vessels would be in short scrapped, which in influence would reduce the supply of the capesize...If you want to prevail a dependable essay, order it on our website: OrderCustomPaper.com

If you want to get a full essay, visit our page: write my paper