Midland Essay

538 Words3 Pages
GENERAL GUIDELINES Your write up should be analytical rather than descriptive of the contents of the case. Your analysis should be geared towards identification of key questions and problems, evaluation of the situations, and offering alternatives and solutions as well as discussing pros & cons of alternatives suggested. Since most cases used in the class require a composite of careful thinking, conceptualization, quantitative analysis and some form of decision making your analyses will be evaluated based on breadth and depth of your thought process documented in your submitted paper.You should make a significant effort to make use of the information and data provided in exhibits and footnotes. While I provided you specific questions, you should synthesize your analysis in a separate section in the spirit of an executive summary. MIDLAND ENERGY 1. How are Mortensen’s estimates of Midland’s cost of capital used? How, if at all, should these anticipated uses affect the calculations? 2. Calculate Midland’s corporate WACC. Be prepared to defend your specific assumptions about the various inputs to the calculations. Is Midland’s choice of EMRP appropriate? If not, what recommendations would you make and why? 3. Should Midland use a single corporate hurdle rate for evaluating investment opportunities in all of its divisions? Why or why not? 4. Compute a separate cost of capital for the E&P and Marketing & Refining divisions. What causes them to differ from one another? 5. How would you compute a cost of capital for the Petrochemical division? OCEAN CARRIERS CASE DISCUSSION GUIDELINES Ocean Carriers uses a 9% discount rate to evaluate its investment projects. 1. Do you expect daily spot hire rates to increase or decrease next year? 2. What factors drive average daily hire rates? 3. How would you characterize the long-term prospects of the capesize dry bulk

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