Review the Harvard Business School Case (Brief Case) – #4130, dated June 19, 2009 ( See Attached )
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.
1- pages must be more than 1 page and less than 4 pages
2- Grading on Fact Sheet:
- Overview and Assumptions
- 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
- Computation of division-level cost of capital
- Approach used to compute cost of capital for PetroChemical Division
- User Guide Reccomendation – capital project valuation, asset projects, performance evaluation
- Format and Content
- 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
3- Avoiding Plagiarism.
4- See attachment which is Information to compute WACC based upon different capital structures.
5- See attachment which some examples of factsheet.