A Case Study Fact Sheet

Anonymous
timer Asked: Apr 6th, 2017
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Question Description

Midland Energy Resources
-Review the Harvard Business School Case (Brief Case) - #4130, dated June 19, 2009 pdf Attached

-See attachment which is Information to compute WACC based upon different capital structures.

-The assignment requirements in the attached file


Very important Notes:
1.Overview and Assumptions:
A. Appropriateness of T-bond maturity used
B. Appropriateness of equity risk premium used
C. Appropriateness of using firm-level WACC for divisions
D. Approach to defining division-level cost of capital
2. Computation of firm-level WACC
3. Computation of division-level cost of capital
4. Approach used to compute cost of capital for Petro Chemical Division
5. User Guide Recommendations - capital project valuation, asset projects, performance evaluation
6. Format and Content


Format:
1- Number of pages must be (4 pages

standard 1" margins
single-spacing (text)
double-spacing between paragraphs
no paragraph indentation (left justified)
size 12 font, Times New Roman, black text
italicized or bold font for section headings
3- Avoiding Plagiarism.

See the link which some examples of fact sheet :
https://www.dropbox.com/sh/v2nznicvydwku61/AACOPivXIhGnRYNc6rwBqpTpa?dl=0

Tutor Answer

FinAccGuru
School: UT Austin

Here is the answer. Thanks

Midland Energy
Resources Inc.

Overview
Cost of capital refers to the marginal cost
of raising funds or money for operation or
expansion of a company. Cost of capital is
used for many business analysis &
decisions including performance
assessment, capital budgeting/ investment
appraisal, project valuation etc.. Midland
Energy Resources Inc.is a global energy
company with three operating segments or
divisions including exploration &
production division, refining & marketing
division, and petrochemical division. Now
it is considering to estimate its cost of
capital for overall (corporate), and three
operating segment/ division level.
Determination of appropriate cost of
capital is very important as it is directly

linked to the value maximization of the
company. In the capital structure decision,
the target cost of capital of a company is
determined which is in-turn used in the
capital budgeting purpose.

Corporate Level and Division Level
Cost of Capital
Three divisions or business segments of
the Midland Energy Resources Inc.
include exploration & production division,
refining & marketing division, and
petrochemical division. Midland Energy
Resources Inc. is considering to estimates
the cost of capital at both- corporate level,
and division level. Corporate level cost of
capital is the overall firm-wide marginal
cost of raising funds given the underlying

risk exposure of the firm. Division- level
cost of capital is the marginal cost of
raising funds given the underlying risk
exposure of it. Determination of cost of
capital at both level is important as
investment appraisal & capital bud...

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Review

Anonymous
Tutor went the extra mile to help me with this essay. Citations were a bit shaky but I appreciated how well he handled APA styles and how ok he was to change them even though I didnt specify. Got a B+ which is believable and acceptable.

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