1.Overview of the problem (OPTIONAL, a brief introduction of the problem you are solving, sometimes you can also state your recommendation or conclusion here)

2.Main body of the write up (your analysis process. Here you can insert graphs, exhibits, and etc to show your analysis, but notice that if you decide to put all your graphs and exhibits in Appendix, please make a clear statement in your explanation to lead us to the relative information. For example, after a whole paragraph of explanation, you can write 'Here please refer to Appendix 1' to lead us to Appendix 1 and see the graphs, exhibits, calculation, and etc that will support what you wrote about)

3.Recommendation or Conclusion (OPTIONAL, if you already indicate them in the Overview part, it's not necessary for you to write this)

Ocean Carriers Case Questions The purpose of this case is to estimate the relevant financial data necessary to generate cash flow projections and calculate the Net Present Value (NPV) of an investment opportunity. 1. Do you expect daily spot hire rates to increase or decrease in 2001 and 2002? What factors drive average daily hire rates? 2. How would you characterize the long-term prospects of the capesize dry bulk industry? 3. Estimate the annual cash flows for the full 25 years, generated from purchasing the capesize. Make 2 different assumptions regarding taxes. 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 are also exempted from paying any tax on profit made on cargo uplifted from Hong Kong. Clarifications: The time of the case is January 2001 and this is when you would make the first $3.9 million payment if you purchase the capesize. The second $3.9 million is one year away in January 2002. The remaining balance would be paid in two years - at the end of December 2002. You would begin operating the boat on January 1, 2003 so you would need to purchase supplies for the ship (the $500 thousand investment in working capital) in advance. No information is provided about the scrap value if you operate the vessel for 25 years. Make a reasonable assumption. 4. Should the ship be scrapped for $5 million after 15 years or continue to be operated through the entire 25 year period? Assume Ocean Carriers uses a 9% discount rate. 5. Should Ms. Linn purchase the $39M capesize? Ocean Carriers Case Questions The purpose of this case is to estimate the relevant financial data necessary to generate cash flow projections and calculate the Net Present Value (NPV) of an investment opportunity. 1. Do you expect daily spot hire rates to increase or decrease in 2001 and 2002? What factors drive average daily hire rates? 2. How would you characterize the long-term prospects of the capesize dry bulk industry? 3. Estimate the annual cash flows for the full 25 years, generated from purchasing the capesize. Make 2 different assumptions regarding taxes. 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 are also exempted from paying any tax on profit made on cargo uplifted from Hong Kong. Clarifications: The time of the case is January 2001 and this is when you would make the first $3.9 million payment if you purchase the capesize. The second $3.9 million is one year away in January 2002. The remaining balance would be paid in two years - at the end of December 2002. You would begin operating the boat on January 1, 2003 so you would need to purchase supplies for the ship (the $500 thousand investment in working capital) in advance. No information is provided about the scrap value if you operate the vessel for 25 years. Make a reasonable assumption. 4. Should the ship be scrapped for $5 million after 15 years or continue to be operated through the entire 25 year period? Assume Ocean Carriers uses a 9% discount rate. 5. Should Ms. Linn purchase the $39M capesize