The vessels in Ocean Carriers’ current fleet could not be committed to a time charter
beginning in 2003 because the ships were either already leased during that period or were too small to meet the customer’s needs.
Moreover, there were no sufficiently large capesizes available in the second-hand market.
Ocean Carriers had to decide immediately if it should commission a new 180,000 deadweight ton ship for delivery in early 2003.
The ship would cost $39 million, with 10% of the purchase price payable immediately and 10% due in a year’s time.
The balance would be due on delivery.
A new ship would be depreciated on a straight-line basis over 25 years.
In addition, Linn expected to make a $500,000 initial investment in net working capital, which she anticipated would grow with inflation.