Midland Energy Resources, Inc"

Assignment Questions:

2. How are Mortensen's estimates of Midland's cost of capital used? How, if at all, should these anticipated uses affect the calculations?
3. Calculate Midland's corporate WACC. Be prepared to defend your specific assumptions about the various inputs to the calculations. Is Midlands choice of EMRP appropriate? If not, what recommendations would you make and why?
4. Should Midland's use a single corporate hurdle rate for evaluating investment opportunities in all of its divisions? Why or why not?
5. Compute a separate cost of capital for the E&P and Marketing and Refining divisions? What causes them to differ from one another?
6. How would you compute a cost of capital for the Petrochemical division?

Answer rating: 100% (QA)

Mortensens estimates of Midlands cost of capital are utilized for several purposes such as investment evaluation project valuation and determining app... View the full answer