Scenario 1 Energy Inc. has a present obligation (IAS 37-17) and probable liability (ASC 450-20-25-2) on December 31‚ 2011 as a result of a past event‚ the contamination of the land‚ because it is virtually certain that a draft law requiring cleaning up will be enacted. It is probable (more likely than not) that Energy Inc. will be required to transfer economic benefits in settlement which is an outflow of resources embodying economic benefits in settlement (IAS 37-23). The amount of the obligation
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the Beta of equity in the CAPM formula. In the case we are given the Beta of equity for the corporation. Therefore to calculate the cost of equity we plug the Beta of equity into the CAPM formula. Through this calculation we conclude that the cost of equity is 11.23%. These are the results we obtain: Company’s Beta of Equity = 1.25 | Find Cost of Equity (Ke) by CAPM | Ke @ EMRP of 5% = .0498+1.25(.05) | 0.11230 | The next step Midland needs to take in order to determine its corporate
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Rf=0.0498 2. Cost of debt‚ which is determined by adding the spread to Treasury (1.62%) to the rate of 30-year treasury bonds in 2007. Rd=0.0498+0.0162=0.066 3. Cost of equity‚ the EMRP (5%) and D/E (59.3%) was taken out of the context of the case. βa=Equity Beta/(1+D/E)= 1.25/(1+0.593)= 0.78 According to Table1‚ consolidated D/V is 42.2%‚ E/V is 57.8%‚ βe= βa*(1+D/E)= 0.78*(1+0.422/0.578)=1.35 Re=Rf+ βe *EMRP= 0.0498+(1.35*0.05)= 0.1173 4. WACC‚ the tax rate (38.58%) was from the 2006
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Midland Energy Resources‚ Inc.: Cost of Capital Situation Analysis Company is trying to estimate cost of capital for each of the three divisions‚ Exploration and Production (E&P)‚ Refining and Marketing (R&M) and Petrochemicals. Cost of capital analysis is used in taking following decisions in the organization: Project appraisal Financial accounting Stock repurchases decisions Merger & Acquisitions Performance assessment The estimates produced by treasury were criticized because of specific
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Energy conservation helps ensure available resources for future generations and also helps prevent pollution. Most of our current energy sources today are not renewable‚ which means that they will eventually deplete. As a member of the Home Owner’s Association I believe that it is extremely important for us to educate our community about the importance of energy conservation. Teaching the community that energy is not a right but a privilege will educate‚ empower‚ and make us aware of the importance
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Energy Resources and their Uses in Producing Electricity Renewable energy is energy drawn from natural processes that are restored quicker than they are used up‚ some renewable energy resources are biomass‚ food‚ wind‚ waves‚ flowing water‚ solar and geothermal. The sun however‚ is known to be the ultimate energy resource since almost all energy resources originate from the sun’s energy. This is possible according to the law of conservation of energy which states that energy can’t be destroyed
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ENERGY RESOURCE PLAN Conserving energy is important to our society because it can extend the life time of non-renewable resources. Examples of these are oils‚ coal ‚ and gas. It also minimizes the use of larger more dangerous and environmentally damaging sources ‚such as deep sea oil and tar deposits. Currently the world produces 20 million barrels of oil each year. One-third of that is used by the United Sates. Concidering that only %35 of an oil well can be recoverd one-third is a lot to consume
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Environmental Science Energy Resources. Energy Resources Name; SCI/275 Environmental Science University of Phoenix Instructor Date Energy Resource Introduction: The importance of conserving Energy. We use energy everyday of our lives in our homes when we turn on the light‚ using our air condition‚ heating our homes‚ working on our computers and using any electronically appliances. We pay so much money when we use energy to put on these
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[Energy resources]: The 2 broad types Pros and Cons of each type Ways in which they are harnessed There two main types of energy these are: 1. Potential energy 2. Kinetic energy Potential energy Potential energy is energy stored due to position. The following are some example in which potential energy can be found. 1. Wound-up spring When a spring of a dock work toy car unwinds‚ the stored energy in the spring drives the wheels and the car moves. The wound-up spring is said to posse potential
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grids smarter‚ efficient and secure but will offer solutions to many problems. 1.1.1: Renewable energy: Renewable energy is any natural source which can replenish itself naturally over a short amount of duration. Renewable energy comes from many commonly known sources such as solar power‚ wind‚ hydro power‚ Fuel cells etc. 1.1.2: Why renewable energy? It may not be wrong to say that Renewable energy is playing significant part in fulfilling world’s energy requirement. According
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