Midland Energy Resources

Case study: national Energy Resources, Inc. Company orbit signal: Midland Energy Resources, Inc. (Midland) has a history of more than than great hundred years. in that location be three principal(prenominal) business segments indoors the company: Exploration & Production, Refining & market and Petrochemicals. Objectives: In this newspaper, I am going to estimate and drive the apostrophize of large(p) for Midland and from apiece one of its three divisions. Assumptions: 1. CAPM pretense is used in calculating re. Since we chose CAPM model to calculate re, because the assumptions of the CAPM Model render to be followed correspondingly. (Some important assumptions of the CAPM Model: 1) Investors be rational and risk-averse 2) Investors are price takers 3) There is no deed or tax income comprises 4) Investors may lend and take on unlimited amounts exploitation the risk deliver rate 5) Investors stand the same t apieceing at the same time, etc. 2. rd and re abide constant for Midland and each of its three divisions For simplicity, I assume rd and re remain constant. 3. Tax rate ashes constant. 4. D/V remains constant. 5. ? remains constant 6. US treasury bonds are risk- relieve and the judge are constant for each maturity.

Although US Treasury bonds tycoon not be free of risk in reality, I assume they are free of risk in this report for simplicity, which is in fact a commonly used assumption. I also assume that the T-bond evaluate remain constant for each different maturity. 7. Costs of expectant to be calculated are effective in picture valuation in 2007 only. They canno! t be used in evaluation after 2007. This is to help pledge projects are accurately elevate based on the closely current data provided. 8. There are other assumptions which impart be mentioned later in the computing and Analysis part. Calculation and Analysis: To calculate the cost of capital for Midland and each of its three business segments, the figure for weighted average cost of capital (WACC) will be used as shown to a lower place: [pic] D=market...If you want to get a full essay, rear it on our website: BestEssayCheap.com

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