Midland Energy Resources‚ Cost of Capital The case is about how Janet Mortensen‚ senior vice president of project finance for Midland Energy Resources‚ prepare her annual cost of capital estimates for midland and each of its three divisions for her company. Midland was a global energy company with operations in oil and gas exploration and production (E&P)‚ refining and marketing(R&M)‚ and petrochemicals. Estimates of cost of capital prepared by Mortensen were used in many analyses within
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The problems to estimate the cost of capital Before starting to describe the problems associated to the estimation of the cost of capital‚ it is extremely relevant to describe its meaning: according to Investopedia‚ it is “the cost of funds used for financing a business”. In order to carry out this process‚ the companies can only be financed through equity; only through debt; or using a “combination of debt and equity” - in this particular case it is a “overall cost of capital derived from a
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Introduction: Midland Energy Resources‚ Inc. is a global energy company with its operations in three divisions – Oil and gas exploration‚ Refining and Marketing and Petrochemicals. The company has been there for 120 years and in 2007 had more than 80‚000 employees. It has been a very profitable company with reported operating revenue of $248.5 billion and operating income of $42.2 billion in 2006. The primary goals of Midland’s financial strategy are to fund overseas growth‚ invest in value-creating
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ESE 540 Case Study 1: Midland Energy Resources‚ Inc.: Cost of Capital Team S As a profitable company that has been incorporated more than 120 years and with more than 80‚000 employees‚ Midland Energy Resources provides a wide range of operation and services‚ which can be concluded with three
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Brandeis (who was responsible for many of Wilson’s ideas in the first place) wrote a series of articles for Harper’s Weekly which outlined why the New Freedom was necessary and how best to implement it. In 1914‚ the articles were collected in book form and published under the title Other People’s Money--and How the Bankers Use It. Brandeis’ central thesis was that the large banking houses were colluding with businessmen to create trusts in America’s major industries. Brandeis felt that not only did
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Pfizer Inc.’S Cost of Capital and Capital structure - Xiaoyue Shi The costs of capital and capital structures for Pfizer Inc. and its two competitors Merck & Co. Inc. and Johnson & Johnson in the pharmaceutical industry are analyzed in this memo. When calculating the cost of common stock for the three companies‚ three different approaches including Capital Asset Pricing Model (CAPM)‚ Discounted Cash Flow (DCF) and the bond yield plus risk premium are applied (Appendix A). For CAPM approach
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1. For what purposes does Mortensen estimate Midland’s cost of capital? What would be the potential consequences of a too high estimate compared to the firm’s “true” cost of capital? What about a too low estimate? The purpose is that the cost capital will be used for capital budgeting‚ financial accounting‚ performance assessment‚ stock repurchases estimations. Also the cost of capital is a necessary basis for the expected growth and forecasted demand. The too high estimated cost of capital means
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1. How are Mortensen’s estimates of Midland’s cost of capital used? How‚ if at all‚ should these anticipated uses affect the calculations? Mortensen’s cost of capital estimates are used for a variety of purposes at both the divisional and corporate levels. Examples include internal analyses such as financial accounting‚ performance assessment and capital budgeting‚ while others are used for strategic planning purposes such as merger and acquisition‚ as well as stock repurchase decisions (Luehrman
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7/22/2015 How to use porter ’s five forces model (http://www.smartinsights.com) Sign in (/wp-login.php) Become a member (/membership/) Resources (/digital-marketing-advice/) Blog (/blog/) About (/about/) Contact us (/contact-us/) How to use Porter’s five Forces NOVEMBER 18‚ 2013 MARKETING MODELS (HTTP://WWW.SMARTINSIGHTS.COM/MARKETING-PLANNING/MARKETING-MODELS/) (http://www.smartinsights.com/marketing-planning/marketing-models/porters-five-forces/?share=twitter&nb=1) (http://www.smartinsights
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The Cost of Capital for Goff Computer‚ Inc. Rahul Parikh BUS650: Managerial Finance (MAH1209A) Dr Charles Smith March 18‚ 2012. The Cost of Capital for Goff Computer‚ Inc.: 1. Most publicly traded corporations are required to submit 10Q (quarterly) and 10K (annual) reports to the SEC detailing their financial operations over the previous quarter or year‚ respectively. These corporate fillings are available on the SEC Web site at www.sec.gov. Go to the SEC Web site‚ follow the “Search for
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