Case | HBS Case Collection | September 2001 (Revised April 2002)

Ocean Carriers

by Erik Stafford, Angela Chao and Kathleen Luchs

Abstract

In January 2001, Mary Linn, vice president of finance for Ocean Carriers, a shipping company with offices in New York and Hong Kong, was evaluating a proposed lease of a ship for a three-year period, beginning in early 2003. The customer was eager to finalize the contract to meet his own commitments and offered very attractive terms. No ship in Ocean Carrier's current fleet met the customer's requirements. Mary Linn, therefore, had to decide whether Ocean Carriers should immediately commission a new capsize carrier that would be completed two years hence and could be leased to the customer.

Keywords: Cash Flow; Forecasting and Prediction; Cost of Capital; Leasing; Corporate Strategy; Valuation; Shipping Industry; New York (city, NY); Hong Kong;

Citation:

Stafford, Erik, Angela Chao, and Kathleen Luchs. "Ocean Carriers." Harvard Business School Case 202-027, September 2001. (Revised April 2002.)