Midland Energy Resources, Inc.: Cost of Capital - DoCuRi

312983964.xlsx. Page 1 of 8. Midland Energy Resources, Inc.: Cost of Capital. Key Results. WACC. Midland. 8.51%. 0.79. 1.36. Exploration and Productio...
14 downloads 918 Views 90KB Size
Download PDF
Love PNG Images
2017-01-0015 FMG 312983964.xlsx

Midland Energy Resources, Inc.: Cost of Capital Key Results WACC 8.51% 8.75% 9.60% 3.86%

Midland Exploration and Production Refining and Marketing Petrochemicals

βA 0.79 0.84 0.98 -0.14

βE 1.36 1.56 1.41 -0.23

WACC for Midland: Equity Beta Current from Exh 5

βE D/E E/V D/V

1.25 59.30% 62.80% 37.20%

Tax Rate

T

38.58%

Formula: (E/V)*βE Now for Target capital Structure again New beta E

βA

βE

Cost of Equity

rf MRP re

Cost of Debt Weightage Average Cost of Capital

rd WACC

0.785

1.36 using E/V=57.8% 4.98% 5.00% 11.77% 6.60% 8.51%

WACC for Exploration and Production:

Cost of Equity

rf MRP re

Cost of Debt Weightage Average Cost of Capital

rd WACC

4.98% 5.00% 12.76% 6.58% 8.75%

Calculations for βA Jackson Energy, Inc.

Page 1 of 8

2017-01-0015 FMG 312983964.xlsx

D/E 11.20% βA

D/E 11.2/100 0.80

V 111.2

E/V 89.93%

Wide plain petroleum D/E 85.40% βA

D/E 85.4/100 0.65

V 185.4

E/V 53.94%

Corsicana Energy Corp D/E 15.20% βA

D/E 15.2/100 0.96

V 115.2

E/V 86.81%

Worthington Petroleum D/E 47.50% βA

D/E 47.5/100 0.94

V 147.5

E/V 67.80%

0.84 Unlevered Average βA of Industry βE

1.56

WACC for Refining and Marketing:

Cost of Equity

rf MRP re

Cost of Debt Weightage Average Cost of Capital

rd WACC

4.98% 5.00% 12.05% 6.78% 9.60%

Calculations for βA Bexar Energy, Inc D/E 10.30% βA

D/E 10.3/100 1.54

V 110.3

E/V 90.66%

D/E 19.40%

D/E 19.4/100

V 119.4

E/V 83.75%

Kirk Corp

Page 2 of 8

2017-01-0015 FMG 312983964.xlsx

βA

0.79

D/E 20.90% βA

D/E 20.9/100 1.47

V 120.9

E/V 82.71%

Petrarch Fuel services D/E -12.00% βA

D/E -12/100 0.27

V 88

E/V 113.64%

Arkana Petroleum Corp D/E 32.30% βA

D/E 32.3/100 0.94

V 132.3

E/V 75.59%

Beaumont Energy, Inc. D/E 20.60% βA

D/E 20.6/100 0.86

V 120.6

E/V 82.92%

Dameron Fuel Services D/E 50.30% βA

D/E 50.3/100 0.94

V 150.3

E/V 66.53%

white point energy

0.98 Unlevered Average βA of Industry βE

1.41

WACC for Petrochemicals: We will calculate the βA of Petrochemicals divisions by using the equation: Midland βA

=

0.785 βA of Petrochemicals

Division E&P R&M Petrochemicals

E&P Wa*βA

R&M Wa*βA

0.45

0.35

-0.136 Calc for Asset Weights Assets 140,100 Wa 93,829 Wa 28,450 Wa

0.53 0.36 0.11

Page 3 of 8

2017-01-0015 FMG 312983964.xlsx

Total Midland Target capital Structure From Table 1 D 40.00%

262,379

E 60.00%

βE

-0.23

Cost of Equity

rf MRP re

4.98% 5.00% 3.85%

Cost of Debt Weightage Average Cost of Capital

rd WACC

6.33% 3.86%

Page 4 of 8

2017-01-0015 FMG 312983964.xlsx

re 11.77% 12.76% 12.05% 3.85%

for Midland:

Target capital Structure From Table 1 D E 42.20% 57.80% For Tax Income before taxes Tax Tax rate

30,447 11,747 38.58%

Yield to maturity for 30-year US bond Debt payment spread to Treasury

4.98% 1.62%

ration and Production: Target capital Structure From Table 1 D E 46.00% 54.00% For Tax Income before taxes Tax Tax rate

T

Yield to maturity for 30-year US bond Debt payment spread to Treasury

30447 11747 38.58% rf

4.98% 1.60%

Page 5 of 8

2017-01-0015 FMG 312983964.xlsx

D/V 10.07%

βE 0.89

D/V 46.06%

βE 1.21

D/V 13.19%

βE 1.11

D/V 32.20%

βE 1.39

ining and Marketing: Target capital Structure From Table 1 D E 31.00% 69.00% For Tax Income before taxes Tax Tax rate

30447 11747 38.58%

T

Yield to maturity for 30-year US bond Debt payment spread to Treasury

D/V 9.34%

βE 1.7

D/V 16.25%

βE 0.94

rf

4.98% 1.80%

Page 6 of 8

2017-01-0015 FMG 312983964.xlsx

D/V 17.29%

βE 1.78

D/V -13.64%

βE 0.24

D/V 24.41%

βE 1.25

D/V 17.08%

βE 1.04

D/V 33.47%

βE 1.42

Petrochemicals:

Petrochemicals Wa*βA 0.11*βA

Page 7 of 8

2017-01-0015 FMG 312983964.xlsx

Page 8 of 8