business project

Project Description:

exxon-mobil case instructions
1. provide an overview (synopsis) of the case. this is the case introduction that provides relevant background information (case situation).
2. include a discussion of the start-up costs and expected cash flows from the project. please incorporate future oil prices in the discussion.
3. estimate discount rates for the project using lessard method (page 10, appendix 2). use data given in table 2 (page 4).
4. compute npvs using the discount rate from step 3.
5. compute irr and compare against the discount rate from step 3.
6. explain your findings.
7. since oil prices may not remain at $58, and discount rates can vary, please provide a sensitivity analysis of npv (i.e., compute npv) for oil prices from $20 to $90 with a $5 increment and different discount rates that you computed. your will need to redo the cash flows using $20, $25, etc. oil prices and compute npvs for these oil prices using each of the six discount rates that you have computed. it will be less tedious if you use excel.
8. provide recommendations and wrap up.
in step 7, recompute npvs on a spreadsheet, using oil prices from $20 to $90 with a $5 increment using the discount rate you found in step 3.

then, on the same table, recompute npss for these various oil prices, but this time using few discount rates around the step 3 discount rate. the purpose of this analysis is to determine to what extent this investment project is profitable if oil price changes (up or down), and the firm's cost of capital changes. you recommendation for the project should address these results.
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Price Type: Fixed

Project Budget: $20 to $50
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