Continental Carriers Inc., established in 1952, is a regulated general commodities motor carrier whose routes ran the length of the Pacific Coast, from Oregon and California to the industrial Midwest, and from Chicago to several points in Texas. Continental Carriers struggled early, experiencing little growth, until the mid-1970’s. Continental needed help in reducing operating costs and also sought improvement in terminal facilities. John Evans, president of CCI, made this possible. Entering CCI
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Ocean carriers has been approached by a customer who is offering attractive terms for a three year ship lease. However, there is no existing ship that meets the customer’s needs, so Mary Linn, Vice President of Finance, must decide if we should purchase a new ship that will meet the customer’s demands for $39 million. Since the lease is only for three years we need to analyze if by continuing to operate the ship for other charterers will be a profitable project for Ocean Carriers. It is the company’s
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1. What is the nature of the product? What are its strengths and weaknesses? The Beach Carrier is a large bag with multiple pockets. It can carry big items, such as chairs or small items such as sunscreen and sunglasses. Strengths: * Not a lot of competition * Can carry a multitude of items * Manufactured in top-quality fabric * Doesn’t take up much space when stored away * Lighter than other bags of similar size * Less expensive than similar bags * It will be offered
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Continental Carriers, Inc., (CCI) is known as a regular commodities motor carrier. Since its inception, it has experienced continuous growth in revenues and mastered the strategic reduction of operating costs. It soon became known in the trucking industry as a widely profitable key player. In order to sustain continuous growth in revenues and income, management has decided that key acquisitions need to be made. The top contender, Midland Freight, Inc., a common carrier company would
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Case Study Questions Capital Budgeting In Practice Ocean Carriers These questions relate to the Ocean Carriers case in your course packet. You can find the data for this case on the course website in a spreadsheet named: Ocean Carriers Exhibits.xls. This case provides the opportunity to make a capital budgeting decision by using discounted cash flow analysis to make an investment and corporate policy decision. Ocean Carriers is a shipping company evaluating a proposed lease of a ship for
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Ocean Carriers Case Study Q1. a). we expect the daily spot hire rates to decrease in 2001 and 2002 according to the forecast in exhibit 5. This decline in daily spot rates is also supported by the forecast in Exhibit 3 showing a decline in ordering bulk capsizes from 63 in 2001 to 33 in 2002. Spot hire rates tend to fluctuate depending on the highs and lows trading volumes in the market. So since according to the forecast the demand for Iron ore had a poor market outlook in 2001, the spot hire
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Ocean Carriers: Case Study MBA 540 Fall 204 Janelle Roche King Quaidoo Suzanne Ekstrom Net Present Value: 15 Year Evaluation if the United States with a 35% Taxation Net present value is used in order to determine the present value of an investment by the discounted sum of all cash flows received from a project. In this case this would be the calculation of the single project capital budgeting for Ocean Carriers Inc. and a purchase of 15 year operation vessel. This 15 year time span would begin
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Case Study 1 – Ocean Carriers 1. The Capital Budgeting Decision Should Ms. Linn purchase the Capesize vessel? Assume that Ocean Carriers is a U.S. firm and is subject to 35% taxation. (Please see excel sheets) From our analysis it appears that Ms. Linn should not buy the Capesize vessel. The Net Present Value on the Ocean Carrier is not a positive number, a clear indicator that buying the vessels is not a good idea. The tax rate of 35% makes a lot of difference in determining this NPV
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worldwide supply of capesizes by 11% and 5.4%, respectively. Furthermore the worldwide capesize fleet is relatively young – only 8 capesizes are at least 20 years old – there should be relatively few scrappings. For example Exhibit 5 of the Ocean Carriers case study shows the direct correlation between the number of shipments of iron ore and the average daily spot rate. From 1995-1996, the average spot rate fell from $20,149 to $11,730 and from 1997-1999, the average spot rate fell from $14,794 to
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Background Ocean Carriers Inc. is a shipping company specializing in the operation of capsizes bulk dry carriers. In January 2001, Mary Linn, the vice President of Finance for Ocean Carriers was evaluating the purchase of a new capsize carrier for a three years lease proposed by a motivated customer. The leasing contract offers very attractive terms, but no ship in Ocean Carrier’s current fleet met the customer’s requirements. In addition, this proposed contract is only for three years. Therefore
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