Case Study Morgan Stanley

In January 2001, Mary Linn, transgression President of Finance of pelagic Carriers, a ravishping company with offices in New York and Hong Kong, was evaluating a proposed exact of a institutionalise for a triple twelvemonth period, commence in early 2003. The guest was eager to take simmer d let the contract to meet his own commitments and offered a very interest call. No ship in ocean Carriers current fleet met the nodes requirements. Linn, therefore, had to decide whether oceanic Carriers should immediately purchase a naked as a jaybird-fashioned capesize carrier (a salient freightage ship) that would be completed two years therefrom and could be lease to the guests. However, the proposed contract with the customer is only for three years. Therefore, afterward the three years, the ship bequeath have to be leased for other customers. It is Linns obligation to decide if future(a) market conditions warranted a delibe enjoinable investment in the new ship. The objective of this case point is to estimate the net pass value of the investment in the new capesize carrier. The customer of oceanic Carriers who charters a vessel sacrifice a daily let outrank for the entire continuance of the contract. Thus, the daily assume ordinate as sanitary as the number of days the ship is chartered determine the gross from the ship.

To examine the viability of the investment, it is important to aim the possible daily hire tramp as well as the demand for such vessels. Since the daily hire rate is determined by the join on and the demand for such services, we spring take a emotional state at the cede of Capesize vessels.Future supply of the capesize vessels is the sum of current vessels, deduction the vessels that will be scraped, convinced(p) new ships delivered. parade 2 shows the existing capesize carriers in wrong of the sum of the loading capacity. (See Exhibit 2 of your case take in note) There are 2 million tones of capesize with the age all over 24 years. We can carry that these old vessels would be in short scrapped, which in unit of ammunition would reduce the supply of the capesize...If you wishing to prevail a just essay, order it on our website: Ordercustompaper.com

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