plz make sure that ((it must have (citation and reference ) without citation and reference it will not be acceptable .)) ExxonMobil (XOM) is one of the half-dozen major oil companies in the world. The...

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plz make sure that ((it must have (citation and reference ) without citation and reference it will not be acceptable .))






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. In 2009 ExxonMobil acquired XTO Energy for $41 billion. The XTO acquisition gave ExxonMobil a significant presence in the development of domestic unconventional natural gas resources, including 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 is to look into the proper cost of capital for use in making corporate investments across the company’s many business units.




  1. 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?

  2. 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 ap-proach 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.

plz make sure that ((it must have (citation and reference ) without citation and reference it will not be acceptable .))


Answered Same DayFeb 08, 2022

Answer To: plz make sure that ((it must have (citation and reference ) without citation and reference it will...

Sourav answered on Feb 08 2022
110 Votes
2
Corporate Finance
Case Study Analysis
1. Being a financial analyst, it is important to underst
and the cost of capital for businesses and investors for evaluating investment opportunities. From the case study, it is observed that Exon Mobil is a large company that have their investment plan and initiatives. In this case, it would not be recommended that the company use a single wide cost of capital for analysing their capital expenditure. It is because the company has different operating divisions and global services that the risk of each type of business will be different. So...
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