Assignment:
Review the Harvard Business School Case (Brief Case) – #4130, dated June 19, 2009
Consider the following in your analysis:
The main goal for this case is for Janet Mortensen to append a sort of “user guide” in her 2007 calculations;
If she did append a “user’s guide” what might be her guidance for different types of project analysis at Midland such as capital budgeting and financial accounting, performance assessments, M&A proposals, and stock repurchase decisions;
how might the cost of capital numbers differ or guidance differ for division-level versus corporate-level decisions;
what guidance might she provide with validating the components used to compute the WACC;
how would you compute a cost of capital for the Petrochemical division;
what ‘actual’ firm would you use now as a pure play for the Petrochemical division.
Grading on Fact Sheet:
- Overview and Assumptions – 10 points
- Appropriateness of T-bond maturity used
- Appropriateness of equity risk premium used
- Appropriateness of using firm-level WACC for divisions
- Approach to defining division-level cost of capital
- Computation of firm-level WACC – 5 points
- Computation of division-level cost of capital – 10 points
- Approach used to compute cost of capital for PetroChemical Division – 5 points
- User Guide Reccomendation – capital project valuation, asset projects, performance evaluation – 15 points
- Format and Content – 5 points
- Note
-
- 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
Also
do the calculation
Fact sheet pages must be more than 3 to 4 pages
Avoiding Plagiarism.
See attachment which is Information to compute WACC based upon different capital structures.
See attachment which some examples of factshee
Use one image and use several graphs
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