Ocean Carrier uses a 9% discount rate: How would you characterize the long-term prospects of the capesize dry bulk industry?DISCUSS

Ocean Carriers Case questions 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 capsize? Make two different assumptions.

First, assume thatOcean 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 over seas and also exempted from paying any tax on profit made on cargouplifted from HongKong.

5. What do you think of the company’s policy of not operating ships over 15years old?

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