president of Midland Energy Resources, Inc., to advise her on cost of capital matters. Read the “Midland Energy Resources, Inc.: Cost of Capital” case (HBP #4129) handed out in class. This case illustrates how the Capital Asset Pricing Model (CAPM) may be used to estimate the Weighted Average Cost of Capital (WACC) in a corporate setting. Then, working with your team, answer each of the following questions using data provided in the case: i. Why is Midland concerned about its WACC? How will it use
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Midland Energy Resources, Inc.: Cost of Capital This case describe an global energy company, whose name is Midland, with three operations in oil and gas exploration and production (E&P), refining and marketing (R&M), and petrochemicals. We are going to calculate the cost of the capital of this company, and answer the following three questions. What are the cost of capital for Midland debt and equity? What is the WACC for Midland? What should be the cost of capital for Midland operational
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Chengze Chen Kevin M. Sweeney 04/17/2015 Midland Energy Resources Case Analysis Midland is an international energy company whose businesses include oil and gas exploration, refining and marketing and petrochemicals. In 2006, its revenue has reached $248.5 billion while its income is $42.2 billion. Midland’s capital planning model basically depends on the macro financial market and strategy of the overall company in 2007, which includes stimulating the overseas growth, investing in valuable
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Midland Energy Resources, Inc.: Cost of Capital This case describe an global energy company, whose name is Midland, with three operations in oil and gas exploration and production (E&P), refining and marketing (R&M), and petrochemicals. We are going to calculate the cost of the capital of this company, and answer the following three questions. What are the cost of capital for Midland debt and equity? What is the WACC for Midland? What should be the cost of capital for Midland
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Executive Summary Midland Energy Resources is a leading global energy developer dedicated to providing advanced power systems and energy services around the world. Midland Energy Resources has three divisions Exploration & Production, Refining & Marketing, and Petrochemicals. They have been incorporated more than 120 years previously and they have 80,000 employees in 2007. Janet Mortensen, the senior vice president of project finance for Midland Energy Resources must determine the weighted average
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Executive Summary Midland Energy Resources is a leading global energy developer dedicated to providing advanced power systems and energy services around the world. Midland Energy Resources has three divisions Exploration & Production, Refining & Marketing, and Petrochemicals. They have been incorporated more than 120 years previously and they have 80,000 employees in 2007. Janet Mortensen, the senior vice president of project finance for Midland Energy Resources must determine the weighted
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Memorandum To: Ms. Mortensen CC: Prof. Bjorn Johnson Date: 02/25/2013 Subject: Midland Energy Resources, Inc. Analysis Janet Mortensen, senior vice president of project finance for Midland Energy Resources, needs to estimate the cost of capital because it is an important data for estimating the project whether it will be profitable and worth the resources and risk. As mentioned in the case, Midland estimates the cost of capital to be used in analyzing asset appraisals for capital budgeting
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Midland Energy Resource Case Analysis 1. Describe Midland, its capital planning model and Janet Mortensen's role in the case. Midland Energy Resource, Inc. has three major divisions: Exploration & Production (E&P), Refining and Market (R&M), and Petrochemicals. E&P division provides the most profit for Midland. R&M is the largest division in Midland by revenue. Petrochemicals is the smallest division in Midland. Midland’s financial strategy in 2007 consisted of four principals:
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Case Analysis: Midland Energy Resources, INC.: Cost of Capital Midland’s consolidated balance sheet and its access to global financial and commodity markets Midland Energy Resources, Inc. was a global integrated oil and gas company. It had sometimes presented attractive opportunities to trade securities and commodities. Midland was been incorporated more than 120 years with more than 80000 employees in 2007. Midland conservative compared to some of its large competitors, but it did have a group
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Midland Energy Resources, Inc.: Cost of Capital Analysis TABLE OF CONTENTS I. EXECUTIVE SUMMARY ........................................................................................ 2 II. COMPONENT ESTIMATIONS ............................................................................... 2 1. Effective Tax Rate - t ............................................................................................. 2 2. Capital Structure – D/E ..............................................
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