ST Boat Sale

ProHub Comment

This case teaches candidates to build a financial valuation model by working backwards from operational metrics (tonnage, sailing days, costs) to calculate annual profits, then apply a simple multiple to determine enterprise value. The critical insight is recognizing that the buyer may extract significantly more value by utilizing the boat's empty return journey—doubling potential profits—which justifies the $72M offer despite the NPV calculation showing $96M.

Estimated Time 15 minutes
Difficulty Easy
Source Columbia
50 / 100
Our client owns a boat, and he wants to know if they should sell it or not

Clarifying Information

  1. What type of boat is this? Client owns a supertanker
  2. What does the boat do/what is it used for? Oil transportation. Sails empty to Russia, picks up crude oil, and ships it back to the Netherlands. The clients pay him for the transport
  3. Who is interested in buying this boat? Container ship company is interested in the boat
  4. What is the capacity? 50,000 tonnage, can transport anything
  5. What is the boat’s useful life? 13 years old, 25 useful life
  6. What are the specs? Tech specs same as stuff in the market