ocean carriers presentation
TRANSCRIPT
Ocean Carriers
Presented By:Ryan DaliegeBill HarriganJon HoustonJames HowellChris Skvir
Assumptions Made
• 9% Discount Rate
• Vessel is an independent project decision
• Salvage Value - $5 Million in Year 15, $0 Million
afterwards
• Corporate Tax Rate – 35% in USA, 0% in Hong Kong
• Spot rates fall in next 2 years, but rise thereafter
35% Corporate Tax Rate
Sales YearNPV with
Assumed Scrap Value
Minimum Sales Price for $0 NPV
Expected Sales Price in Second
Market
15 Year ($5,446,484) $38,268,012 $10,225,851
25 Year ($4,850,834) $70,144,243 $651,206
30 Year ($4,805,800) N/A N/A
Internal Rate of Rate - 35% Corporate Tax Rate
Sales Year IRR with 35% Corporate Tax Rate
15 Year 6.032%
25 Year 6.653%
30 Year 6.699%
0% Corporate Tax Rate
Sales YearNPV with
Assumed Scrap Value
Minimum Sales Price for $0 NPV
Expected Sales Price in Second
Market
15 Year $1,697,792 $0 $12,432,519
25 Year $3,467,463 $0 $962,027
30 Year $3,569,814 N/A N/A
Internal Rate of Rate - 0% Corporate Tax Rate
Sales Year IRR with 0% Corporate Tax Rate
15 Year 9.978%
25 Year 10.742%
30 Year 10.774%
Sensitivity Analysis - 0% Corporate Tax Rate
Current As-sumptions
5% Reduction in Spot Rate
10% Reduction in Spot Rate
5% Increase in Operating Costs
10% Increase in Operating Costs
-$2,000,000
-$1,000,000
$0
$1,000,000
$2,000,000
$3,000,000
$4,000,000
15 Year 25 Year 30 Year
Net
Pre
sent
Valu
e (
NPV
)
Sales Year
Executive Summary - Recommendations
• Do not accept the project under U.S. Tax Law or Hong Kong
Tax Law
• Review the tax inversion option regardless of project
acceptance
• Change the policy to potentially hold vessels past 15 years.
• Updated Free Cash Flow and Net Present Value calculations before
each Special Survey is required with current market conditions.