J & L Railroad 1. J & L can use heating oil futures to hedge its exposure to diesel fuel prices. Which futures position should J & L take? Explain. J&L Railroad should take a long position.
Argument against hedging The most important argument against hedging this type of risk is that a corporation needs to, in exchange for hedging, (i) give up the upside of commodity prices going down (in futures, swaps and collar) or (ii) pay premiums (in options) or (iii) both. If J&L purchases futures or swaps and the fuel price goes down, J&L needs to pay the agreed price (which is above market price). Similarly, if J&L purchases collar and the fuel price goes below floor strike price, J&L needs to pay the floor strike price (which is above market price). If J&L buys call options on futures, it needs to pay premium for the
The Privatization of Mexico’s Oil Industry: Benefits and Problems associated with Privatization Introduction Currently, Mexico’s Congress is discussing an energy reform proposal put forward by Mexico’s President, Enrique Pena Nieto. The President is looking to privatize Mexico’s oil sector in the upcoming months. This energy reform proposal is significant for Mexico and its citizens. The energy reform is also very controversial for Mexico because the country’s oil industry has been nationalized since 1938 and is considered the cornerstone of Mexican National pride (Azul, 2012). President Pena Nieto believes that the reform is the answer to many of Mexico’s oil industry’s problems.
Apparently, her calculation is wrong. To find the cost of debt, we should use the yield to maturity approach: PV=t=1Tc×FV(1+y)T+FV(1+y)T Nike’s bond with a current price of $95.60 will expire on 2021. If the NorthPoint Group decides to invest in 2001, interests will be paid semi-annually for 20 years at a rate of 6.75%. Thus we can calculate the current yield to maturity of the bond to represent the cost of debt before tax as following: 95.6=i=1406.75%×100(1+y)40+100(1+y)40 Question 4: What is your estimate of the debt cost of capital? According to
Executive Summary In 2009, Pharmaceutical giant Pfizer, Inc. acquired Wyeth - a competitor within the industry - for $68B. This report offers a valuation of Wyeth at the time of purchase using two methods: the discounted free cash flow method and the comparable company method. The discounted free cash flow method yields a valuation of $84.73B while the comparable company method yields a valuation range of $57.56B to $73.39B. Part 1: Discounted Free Cash Flow to the Firm Valuation Methodology Discounted Free Cash Flow to Firm (DFCFF) analysis computes the fair value of the firm by taking the following steps: * Forecasting the income statement and balance sheet figures (see Appendices I and II for assumptions) * Preparing the Cash Flow Statement (see Appendix III) and computing Free Cash Flows to Firm (see Appendix V) for the forecasted years. * Determining the WACC and discounting the Free Cash Flow to Firm to obtain the Fair Value of Firm as on 1st July, 2009.
Stacey LaFave Business Economics GM545 Summer B 2008 staceylafave@sbcglobal.net 1. Everyone’s gasoline problems. ---Why do gasoline prices fluctuate? The reason gas prices fluctuate have to do with supply, demand and competition. The Federal Trade commission did a study on why gas prices fluctuate in 2005.
Current projections estimate complete depletion within the next 80 years. What's the point? Where did we go wrong? 2nd Main Point As long as we continue to burn fossil fuels, it will continue damaging the environment. Add to that the import and export of our fuel and then we see how it impacts us financially.
Business Economics GM545 November 2012 Exercise 1: Everyone’s Gasoline Problem. Gas prices are set by many factors, including supply and demand of crude oil, taxes, and demand of the finished product of gasoline. The Oil Producing Exporting Countries (OPEC) is where the price is first determined. The objective of OPEC is to make sure the price of crude oil remains stable so that all oil-producing companies can be profitable while maintaining a steady supply to other countries ("OPEC.com"). Since OPEC sets the price for crude oil, there is already a base price set for the end product of gasoline that is assigned the day the oil barrel was purchased.
Here we shall discuss how it came to pass, through the topic of the economic climate and emerging trading practices of the 1980’s preceding the crash, heavily focusing on program trading, as well as a bit of the market psychology, and the remedial actions and consequences involved with Black Monday. The 1980’s saw the end of the oil crisis and recession of the mid-late 1970’s, and a rapid recovery took place. By the mid-80’s, notably 1986, the year preceding the Black Monday crash, the economy switched gears to slow growth instead of rapid recovery, with the rate of inflation falling (Inflation.eu 2012). The stock markets entered 1987 with the Dow-Jones at 1897 points, and reaching a high of 2722 points August 25th, a 44% rise over the previous year’s closing of 1895 points (Bulkowski 2011). Investors came to the market with bullish attitudes, buying into companies with little research into the financials, and companies grew by leaps instead of steps through the prevalence of mergers & acquisitions, through hostile take-overs and “greenmailing” (Beattie 2012).
Louis Vuitton Proposal To: Marketing Manager CC: Marketing Administrators From: Emma Nguyen Date: [ 7/25/00 ] Re: Foreign Market Entry Proposal After the GFC recession in 2009, the LVMH organization in general and Moët & Chandon in specific somehow be damaged within the Europe and American market and the time of 2011 and 2012 is the time of recovery and look for a new opportunity in a new market or expand the product line. This proposal will briefly outline a preliminary profile of the foreign market which includes economics and socio-culture variables, barriers/ ease to entry and the choice of market entry strategy for one of Moët & Chandon’ product: Dom Pérignon in Asia, particularly in Vietnam. The proposal is only analyzing the entire situation and the environment that the company is facing but also put up with many interesting such as in Marketing Strategies and especially the promotion for the new foreign market: Dom Pérignon Promotion Tour. Confidential Purpose: The purpose of this proposal for the Foreign Market Entry Marketing Plan for Dom Pérignon is to look for a new opportunity to expand to a new market. By drawing in every detail, the marketing plan will be the perfect tool to point out all of the prediction and decide how Dom Pérignon will meet the demand of the new market while generating a profit for the organization.