This website uses cookies to ensure you have the best experience.

# Midland Energy Resources Case Essay

328 words - 2 pages

Question III:
Should Midland use a single corporate hurdle rate for evaluating investment opportunities in all of its divisions? Why or why not?
It depends on what kind of investment opportunity is proposed. If it is an investment that affects the company as a whole on the corporate level then they should use a corporate rate. If it is an investment that applies only to specific divisions then that division’s hurdle rate ...view middle of the document...

The rates should be calculated and used accordingly. The divisions of Midland Energy Resources, Inc. are a bit diverse and therefore any investment opportunities should be separately evaluated based on the division that will be affected.

Question IV:
Compute a separate cost of capital for the E&P and Marketing & Refining divisions. What causes them to differ from one another?
Exploration & Production
rE = rf + β(EMRP) rD = rf + E&P treasury spread
rE = 4.98% + 1.15(5%) = 10.73% rD = 4.98% + 1.6% = 6.58%

rE = 10.73%
rD = 6.58%
tax rate = 39%
D/E = 39.8%
D = 39.8
E = 100
V = D + E = 139.8
D/V = 39.8/139.8 = 0.2847
E/V = 100/139.8 = 0.7153
WACC = rD (D/V)(1-t) + rE (E/V) = .0658(.2847)(1-.39) + .1073(.7153)
WACC = 0.08818, 8.818%

Refining & Marketing
rE = rf + β(EMRP) rD = rf + R&M treasury spread
rE = 4.98% + 1.20(5%) = 10.98% rD = 4.98% + 1.80% = 6.78%

rE = 10.98%
rD = 6.78%
tax rate = 39%
D/E = 20.3%
D = 20.3
E = 100
V = D + E = 120.3
D/V = 20.3/120.3 = 0.1687
E/V = 100/120.3 = 0.8312
WACC = rD (D/V)(1-t) + rE (E/V) = .0678(.1687)(.61) + .1098(.8312)
WACC = 0.09825%, 9.825%

## Other Papers Like Midland Energy Resources Case

### Nuclear Gobolization Essay

2541 words - 11 pages emissions (CO2 and others). Currently, fossil fuels are consumed faster than they are produced, so in the next future these resources may be reduced or the price may increase becoming inaccessible for most of the population. Another advantage is the required amount of fuel: less fuel offers more energy. It represents a significant save on raw materials but also in transport, handling and extraction of nuclear fuel. The cost of nuclear fuel (overall

### Dr Pepper Snapple Group Energy Drink Case Study

1334 words - 6 pages MARKETING CASE NO. 1 DR PEPPER SNAPPLE GROUP, INC. ENERGY BEVERAGES   Definition of the problem The Dr Pepper Snapple Group, Inc. senior company management has developed a corporate strategy to target high-growth and high-margin beverage businesses. The firm is the only major domestic nonalcoholic beverage company in the US without a significant branded energy drink of its own while this beverage market is the fastest growing

### Toulmin Proposal

1683 words - 7 pages resources . The caveat to alternative energy is the cost associated with its production and unknown variables. Alternative energy will help to lessen the strangle hold on fossil fuels and one day be just as competitive with major players like petroleum and natural gas. With oil production projected to increase to 338 billion barrels annually by 2030 the Middle East controls over fifty percent of the world’s oil reserve. Saudi Arabia has the

### Thesis

4639 words - 19 pages CASE STUDY # 1 JETBLUE AIRWAYS PROF. AHSAN DURRANI Submitted by: IMRAN UL HAQUE (4282) Q.NO.4 WHAT IS YOUR ASSESSMENT OF JETBLUE`S FINANCIAL PERFORMACE DURING FISCAL YEARS 2003-2007? ANALYZE THE FOLLOWING RATIO`S. | 2007 | 2006 | 2005 | 2004 | 2003 | Gross Profit Margin | | | | | | Operating Profit Margin | 0.0595 | 0.0537 | 0.0282 | 0.0877 | 0.1673 | Net Profit Margin | 0.0063 | (0.00042) | (0.01176) | 0.0364

### Cost Benefit Analysis

2286 words - 10 pages . Renewables accounted for 19.5% of global electricity generation. (IRENA websites, 2009) According to the report, Woodruff stated that, “In the pacific islands alone approximately 70% (or approximately 50% excluding Papua New Guinea) of the region’s population still lacks access to electricity. In addition, Pacific Island Countries, despite their abundance of renewable energy resources, remain almost completely dependent on imported fossil fuels

### Design And Implementation Of Solar System Simulation

1799 words - 8 pages renewable energy resources. A multi-input power converter consists of a fused multi-input dc–dc converter and a fullbridge dc– ac inverter. The incremental conductancemethod is mainly used to accomplish the maximum power point tracking (MPPT) algorithm for inputsources. The operational principle of the proposed multi-input power converter is explained. A multi-input power converter (MIPC) which operates in four modes: first an operation type wherein

### Decision Making

3959 words - 16 pages money as the profit margins in the traditional oil & gas production is high. Easily accessible oil & gas reservoirs are mostly under exploration or already explored. Companies are extending their capabilities for exploring reservoir in the deep sea. This involves high risk. To sustain the business, companies are exploring alternate energy resources like Shale Gas, Coal Bed Methane Gas and renewable energy sources. Challenges like reservoir

### Miele Case

464 words - 2 pages Miele - Jolanda PP1 – Good afternoon ladies and gentlemen, thank you for having us, and we are presenting the Miele case study. I am Jolanda, this is Peter, and the rest are Hongyi and Nicole. So does anyone know about Miele? PP2 –Miele is a global premium brand which produces domestic appliances and commercial machines in the field of laundry care, dishwashing and disinfection. It was set up in 1899 and it is family owned by Mr Miele and

### Business

298 words - 2 pages  resources, which can cost you a large amount of money. * Too much makes it unpractical. Large files like video and audio has an effect of the time it takes for your presentation to load. Adding too much can mean that you have to use a larger computer to store the files. * In case you want to upload it onto the Internet, there are a few factors to keep in mind, for example bandwidth and the user’sabilities.

### Social Issues

297 words - 2 pages ourselves". The failure to do so causes the birth of a social issue. There are a variety of methods people use to combat social issues. Some people vote for leaders in a democracy to advance their ideals. Outside the political process, people donate or share their time, money, energy, or other resources. This often takes the form of volunteering. Nonprofit organizations are often formed for the sole purpose of solving a particular social issue

### Sustainable Stella

831 words - 4 pages result of extensive research into the use of raw materials from natural origins such as castor-oil seeds and citric acid. The collection is made from over 50% natural and renewable resources. • Stella McCartney sees herself increasing the amount of organic/recycled materials used to the point where all her collections are eco friendly. Case Study 1. : Wind Power • Many of her stores, including her headquarters runs on wind power. She

## Related Essays

### Midland Case Study

1513 words - 7 pages Midland Energy Resources, Inc. Midland Energy Resources, Inc. Is a global energy company with three major divisions, including oil and gas exploration and production (E&P), refining and marketing (R&M), and petrochemicals. Midland has been a profitable company over the past few years. In 2006, the firm, on a consolidated basis, had operating revenue and operating income of \$248.5 billion and \$42.2 billion respectively. Among these three

### Energy Essay

658 words - 3 pages resources that come from the remains of plants and animals. These remains are millions of years old. Fossil fuels, like coal, oil, and natural gas, provide the energy that powers our lifestyles and our economy. Fossil fuels are a finite, non-renewable resource. They remain the primary source for the production of electricity. Fossil Fuel is an attractive source of energy because it is the only powerful source of energy, and because they are accessible

### Something Essay

524 words - 3 pages due to the fact that the sun’s energy will never run out anytime in the future. There's an infinite amount of sunlight that can produce energy and the actual energy production causes no pollution whatsoever. The sun's energy will not run out, so once we have the resources to harbor solar panels then we can keep getting energy essentially forever. However, this is not the case with fossil fuels like oil, which will eventually run out. These

### Mena, Gcc & Eu Energy Security

6903 words - 28 pages energy means transmitted securely. They need reliable lasting resources. The European Union cares about efficiency simultaneously with environmental and climate protection. This triangle GCC (the case of Qatar), North Africa (the case of Egypt) and EU represent a good example of cooperation in energy sector. They are filling different roles in the equation. Qatar is supplying energy means as it owns great reserves, Egypt is offering different