Price Valuing for Compass Maritime Services,

LLC.Di Liu, Yifan Xu, Yudi Gao, Yang Liu, Fatima M. Zaidi

The Best Reference Transaction and PriceQ

We Choose Market Approach to Evaluate Bet Performer

“a recently completed sale of a comparable ship”

Age at sale Dead-Weight Tons

• Variables:

Baltic Dry Capesize Index

The Most Comparable Transaction is Cape Sun

• Cape Sun

Price: $135 Million

• Sumihou Jin Tai Cape Sun Nightflight Cape Falcon

Average Price: $128.2 Million

• MeasureDistance-based Matrix ( Euclidean Distance)

Regression AnalysisQ

An increase in one additional year of age is associated with a decrease of 4.2 millions in price

y = -4.2165x + 133.13 (R²= 0.6201)

The older the ships is, the less financial benefit it can bring according to the life time they left.

An increase in one additional ton of DWT is associated with an increase of 0.99M in price

y=0.9886x - 84.165 (R² =0.265)

The bigger the size of a ship, the more it would be sold for.

R² is not high because it is not the primary factor.

an Additional Increase in 1000 in Baltic Dry Capesize Index is Associated with an Increase of $4.8 Million of Price

y= 0.0048x + 36.431 (R² = 0.124)

R² is quite low because only one variable is evaluated here. The ships can vary in age and size which are more tightly correlated with the price

Age is the BEST predictor of the ship prices

Index Vs PriceR² = 0.124

Size Vs PriceR² = 0.265

Age Vs PriceR² = 0.620

Factors influencing ship price

Condition Engine Size Deck Layout Ship Type

Three factors explain 92% of the total variation in price

X1 is Age At Sale, X2 is Deadweight Ton, and X3 is Capesize Index.

The result is Y = 44.222 - 4.544x1  + 0.242x2 + 0.007x3 , R² = 0.92.

Index: 12,479Price of Bet Performer = 44.222 - 49.984 + 41.624

+ 87.353 = $123.2 M.

The price will be $145.94M, $118.37M and $97.01M

1

2

3

When Bet Performer is 6 years old instead of 11 years old.y = 44.222 - 4.544*6 + 0.242*172 + 0.007*12479 = $145.935 Million （ 22.72 ⬆ ）

When When Bet Performer is 20 DWT smaller (new DWT = 172-20 = 152).y = 44.222 - 4.544*11 + 0.242*152 + 0.007*12479 = $118.375 Million （ 4.84⬇）When charter rates in May 2008 were 30% lower.y = 44.222 - 4.544*11 + 0.242*172 + 0.007*12479*0.7 = $97.0091 Million （ 26.21⬇）

Recommendation & ConcernsQ

$135MSimple Distance-based Metrics(Euclidean Distance Based)

• All factors weight the same

Our offer price is $123 M

$123MMultiple Regression Model

• Age at sale is the primary factor

Concern: The Index Will Increase If We Purchase Later

Interpretation

An increase in one additional month is associated with a 504.63 increase in Capesize Index.

Date explains 99.22% of the total variation in Capesize Index.

Concern: The Price Will Increase If the Index Increases

X1 is Age At Sale, X2 is Deadweight Ton, and X3 is Capesize Index. The result is Y = 44.222 - 4.544x1  + 0.242x2 + 0.007x3 , R² = 0.92.

Condition Engine Size Ship TypeEconomic

Environment Change

Additional factors that may affect sales price

Recommendation: Purchase Now!

2 months later, the predicted Capesize index for July, 2008 would be

Y = 504.63*19 + 3827.5 = 13415.47

The price of Bet Performer will increase to: Y = 44.222 - 4.544*11 + 0.242*172 +

0.007*13415.47  = $129.77092 million.

In one month, the price of Bet Performer will increase 6.556 million, which is 5.32%.

As a result, we offer out customer a price of $123.2M and hope they can sign the contract with us TODAY!!!