must agree to all the terms of the offer‚ and the acceptance cannot be deemed or assumed. In Household Fire Insurance Co. v. Grant (1879) 4 Ex.D 216‚ a letter of allotment of shares which is applied by Grant is sent to him but never reaches him. The Court held that the contract was completed on posting and Grant becomes one of the shareholders of the company. Similarly‚ in Adams v Lindell (1818) B & Ald 681‚ the defendants have sold the promised fleeces elsewhere when the letter of acceptance by the
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Midland Energy Resources‚ Inc.: Cost of Capital Situation Analysis Company is trying to estimate cost of capital for each of the three divisions‚ Exploration and Production (E&P)‚ Refining and Marketing (R&M) and Petrochemicals. Cost of capital analysis is used in taking following decisions in the organization: Project appraisal Financial accounting Stock repurchases decisions Merger & Acquisitions Performance assessment The estimates produced by treasury were criticized because of specific
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Professor Smith Midland Energy Resources‚ Inc.: Cost of Capital Case Questions This case provides an opportunity to determine what cost of capital firms should use when firms are evaluating investment opportunities. The case addresses what inputs should be used in estimating the opportunity cost of capital for investors as well as which firms should be identified as comparables. 1. How are Mortensen’s estimates of Midland’s cost of capital used? How‚ if at all‚ should these anticipated uses
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Midland Chemical Assignment Midland Chemical Co. is negotiating a loan from Manhattan Bank and Trust. The small chemical company needs to borrow $500‚000. The bank offers a rate of 8 ¼ percent with a 20 percent compensating balance requirement‚ or as an alternative‚ 9 ¾ percent with additional fees of $5‚500 to cover services the bank is providing. In either case the rate on the loan is floating (changes as the prime interest rate changes). The loan would be for one year. a. Which loan carries
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Acquisition of Consolidated Rail Corporation 1. Why does CSX want to buy Conrail? How much should CSX be willing to pay for it? 1‚ If the CSX buys Conrail‚ this combination would create the second largest rail system in the United States and the largest rail system east of the Mississippi River. The new company would get the $8.5B in rail revenue and almost 70% of the Eastern Market‚ which means it would have monopoly position in the Eastern Rail Market. 2‚ The combined rail networks would facilitate
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Through this calculation we conclude that the cost of equity is 11.23%. These are the results we obtain: Company’s Beta of Equity = 1.25 | Find Cost of Equity (Ke) by CAPM | Ke @ EMRP of 5% = .0498+1.25(.05) | 0.11230 | The next step Midland needs to take in order to determine its corporate WACC‚ is to find the cost of debt. We can be more confident in the actual future cost of the debt in the future because it is a set amount of interest paid to debt holders. In the case we are told
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Midland Energy Introduction: Midland Energy Resources‚ Inc. is a global multi-division energy company with operations in oil and gas exploration and production (E&P)‚ refining and marketing (R&M)‚ and petrochemicals. On a consolidated level‚ the company had 2006 operating revenue and operating income of $248.5 billion and $42.2 billion‚ respectively. Its largest division is R&M with the Petrochemical division being the smallest. Midland’s most profitable segment is its P&E division which generates
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1. How are Mortensen’s estimates of Midland’s cost of capital used? How‚ if at all‚ should these anticipated uses affect the calculations? Janet Mortensen‚ Senior Vice President of project finance for Midland Energy Resources has calculated yearly annual cost of capital investments for Midland and each of its three divisions. The three divisions consist of oil and gas Exploration and Production (E&P)‚ Refining and Marketing (R&M) and Petrochemicals. E&P is Midland’s most profitable
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Janet Mortensen‚ senior vice president of project finance at Midland Energy Resources‚ is in the process of preparing her annual cost of capital estimates for Midland and each of its three divisions (oil and gas exploration and production (E&P)‚ refining and marketing (R&M)‚ and petrochemicals). These estimates are used in many analyses within Midland‚ including capital budgeting decisions‚ financial accounting‚ performance appraisals‚ M&A proposals‚ and stock repurchase decisions. There has been
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Midland Energy Resources‚ Inc.: Cost of Capital Background Information: ➢ Janet Mortensen‚ Senior vice preside of project finance for Midland Energy Resources ➢ Midland Has three divisions o Exploring and Production(E&P) o Refining and Marketing (R&M) o Petrochemicals ➢ 2006 Operating Revenue-$248.5 billion Operating Income- $42.2 billion ➢ Estimated Cost of Capital used to analyses o Asset appraisal for capital budgeting o
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