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ExxonMobil ( XOM) is one of the half- dozen major oil companies in the world. The firm has four primary operating divisions ( upstream, downstream, chemical, and global services) as well as a number of operating companies that it has acquired over the years. A recent major acquisition was XTO Energy, which was acquired in 2009 for $ 41 billion. The XTO acquisition gave ExxonMobil a significant presence in the development of domestic unconventional natural gas resources, includ-ing the development of shale gas formations, which was booming at the time. Assume that you have just been hired to be an analyst working for ExxonMobil's chief financial officer. Your first assignment was to look into the proper cost of capital for use in making corporate investments across the company's many business units.
a. Would you recommend that ExxonMobil use a single company- wide cost of capital for analyzing capital expenditures in all its business units? Why or why not?
b. If you were to evaluate divisional costs of capital, how would you go about estimating these costs of capital for ExxonMobil? Discuss how you would approach the problem in terms of how you would evaluate the weights to use for various sources of capital as well as how you would estimate the costs of individual sources of capital for each division.
Bond 1 is a one-year zero-coupon bond with $2,000 face value and a market price of $850. What should the market price of Bond 3 be?
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The Uniformed Commercial Code (UCC) Article 2 applies to
Put-call-forward parity and range forward positions both involve the purchase of a call option and the sale of a put option (or vice versa) on the same underlying asset. Describe the relationship between these two trading strategies. Is one a special..
Create an argument supporting that using the earnings-based valuation method yields the most accurate results.
What is the yield to maturity for these bonds?
Calculate the dividend yield on a stock with the following information: (a) Growth Rate: 9%, (b) Price: $36.53, and (c) Dividend: $2.46.
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Pension funds pay lifetime annuities to recipients. If a firm remains in business indefinitely, the pension obligations will resemble a perpetuity.
The legal systems (including commercial law) of most developed countries are derived from one of the following:
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