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.