OCEAN CARRIERS’ CASE
Class BIEM 16 – GROUP 22
Cantella Chiara
Cattaneo Edoardo
De Sanctis Lucrezia Andrea
Pigoli Eleonora
Tenti Francesco
EXECUTIVE SUMMARY
The aim of this report is to advise Ocean Carries regarding the possibility of leasing a $39M capsize.
Given the current and expected market conditions, it is recommended that Ocean Carries buys the
vessel in Hong Kong, where the company is not required to pay any taxes. Furthermore, after careful
analysis, it is suggested to re-evaluate Ocean Carries’ policy of not operating vessels older than 15
years.
SUMMARY OF FACTS!
The new ship would cost $39M, with a 10% down payment (in 2001), 10% due next year and the
balance due on the date of delivery (2003). A straight-line method would be used over 25 years to
depreciate the asset. The expected operating costs are summarized in Exhibit A. Every five years,
international regulations require a Special Survey to be undertaken. Therefore, to save on capital
expenditures, Ocean Carriers scraps vessels once the cost of these surveys become too high, which is
