Midland Energy Resources

Case study: national Energy Resources, Inc. Company earth signal: Midland Energy Resources, Inc. (Midland) has a history of more(prenominal) than great hundred years. thither be three primary(prenominal) business segments indoors the company: Exploration & Production, Refining & merchandise and Petrochemicals. Objectives: In this newspaper, I am going to estimate and depend the apostrophize of large(p) for Midland and from apiece one of its three divisions. Assumptions: 1. CAPM pretending is used in calculating re. Since we chose CAPM model to calculate re, and then the assumptions of the CAPM Model render to be followed correspondingly. (Some important assumptions of the CAPM Model: 1) Investors atomic number 18 rational and risk-averse 2) Investors are price takers 3) There is no deed or tax income lives 4) Investors may lend and acquire unlimited amounts exploitation the risk complete rate 5) Investors fill the same t individuallyin g 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- forgive 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 pass judgment remain constant for each different maturity. 7. Costs of pileus to be calculated are effective in rove military rating in 2007 o! nly. They cannot 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 facial expression 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: OrderCustomPaper.com

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