Ocean Carriers Term Paper Example | Topics and Well Written Essays - 500 words

Ocean Carriers - Term Paper Example A discount rate of nine percent is used by the ocean carrier. Having in mind that, during the 8 days, the customers would not be charged and each and every new vessel will be devaluated or depreciated on the basis of a straight line for over twenty five years. The market rate that prevails in the daily spot is averagely twenty two thousand ($20,000) dollars every day. A discount rate of nine percent is used by the ocean carrier. While viewing at the projections carried out by analysts of Linn and present growth expectation in the ore and iron markets, the long run view for the sinking bulk industry look promising (Chandraiah 88). The increasing exports of ore and iron will make the demand for sinking to increase. It may also permit shipping firms to enlarge their rates. Nevertheless, as rates start to drop immensely and every shipping vessel needs a huge long-term investment, much risk is attached to the firm. Thus, projections should not, in any way, be considered entirely reliable. In the following year, every day hire rates would likely decline as the ore and iron market is anticipated to enlarge in two years’ time. As a result of the decrease in demand for the new shipping vessel, the price will considerably go down. Assuming that ocean carriers are to be subjected to an American tax rate of thirty five percent (35%), using a nine percent (9%) rate of discount, and anticipated every day hire rates foretold by analysts, the agreed upon lease does not seem to translate into profits. This is because of the large investment that was made at the initial stages (Berezin