Saudi Aramco is the world’s largest integrated oil and gas company; its upstream operations manage the Kingdom’s unique hydrocarbon reserve base, optimizing production and maximizing long-term value. It also operates a strategically integrated global downstream business. Headquartered in the city of Dhahran, the company operates within the Kingdom and worldwide, and employs more than 68,000 people (Annual Report) Research and identify the most recent capital investment decisions for the business and the effect of those decisions in the business long term economic sustainability.
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Saudi Aramco is the world’s largest integrated oil and gas company; its upstream operations manage the Kingdom’s unique hydrocarbon reserve base, optimizing production and maximizing long-term value. It also operates a strategically integrated global downstream business. Headquartered in the city of Dhahran, the company operates within the Kingdom and worldwide, and employs more than 68,000 people (Annual Report)
Research and identify the most recent capital investment decisions for the business and the effect of those decisions in the business long term economic sustainability.
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- Kashmiri's Cost of Capital. Kashmiri is the largest and most successful specialty goods company based in Bangalore, India. It has not yet entered the North American marketplace, but is considering establishing both manufacturing and distribution facilities in the United States through a wholly owned subsidiary. It has approached two different investment banking advisors, Goldman Sachs and Bank of New York, for estimates of what its costs of capital would be several years into the future when it planned to list its American subsidiary on a U.S. stock exchange. Using the assumptions by the two different advisors in the popup window, E, calculate the prospective costs of debt, equity, and the WACC for Kashmiri (U.S.). What is the after-tax cost of debt estimated by Goldman Sachs for Kashmiri? 6.24% (Round to two decimal places.) Data table (Click on the following icon in order to copy its contents into a spreadsheet.) Assumptions Symbol Goldman Sachs Bank of New York 0.86 0.36 Estimate of…A firm is adding investment in the stock market of a developing country in their Emerging Markets Fund. This economy is well diversified across manufacturing and agriculture industries, has natural resources and a growing finance sector. It is characterised by large transaction costs in capital markets due to high commissions and taxes on securities trades. Information on financial performance of companies are widely available to the public because of good accounting standards and detailed disclosure requirements. A government agency strictly regulates capital inflows and outflows in the country and foreign ownership of company securities. Non-residents face long delays in settling trades because of the settlement procedures under these foreign ownership rules. The country’s senior finance officials are working on the deregulation of capital flows and foreign ownership. However, the firm’s political consultant believes that real progress cannot be made in the near future because of the…(6)(a)Identify the revenue and cost related motives for direct foreign investment. (b)Suppose a U.S. based MNC plans to invest in a new plant either in the U.S or in Zambia. The MNC intends to invest 30% of its investment spending in this new plant while the remainder is devoted to the firm's existing structure in the U.S. The characteristics of the proposed new project are given below: If located in U.S If located in Zambia Mean expected annual returns on investment 25% 25% Standard deviation of expected annual returns on investment 0.09 0.11 Correlation of expected annual returns on investment with returns on prevailing U.S business 0.80 -0.05 Determine, with robust quantitative explanation, which location will best provide the firm with a more stable flow of revenue.
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- Accurate Blasting Corporation (ABC), a company with profitable ongoing operations, is considering a major project on which the company has already incurred $850,000 in research and development costs. The vice-president in charge of finance has provided you with the following data and worksheet and asked you to determine, using an NPV analysis, if the project should be undertaken. She has also hinted your future with the company hinges on a successful analysis of the project. Data Sheet: Company's tax rate = 40% Company's opportunity cost of capital = 15% Net working capital requirements of the project if it is accepted: Year 0 $150,000 Year 1 $250,000 Year 2 $250,000 Year 3 $250,000 Year 4 $250,000 Year 5 $0 New specialized equipment purchases required for the project total $12,000,000. At the end of the project, it is expected that the equipment can be sold to a competitor for $900,000. This equipment will be depreciated using a 10-year depreciation schedule. During each year of the…Platino Bhd is a Malaysian-based company that focuses on engineering services, property development, food, and beverage sectors. The company's objective is to generate superior investment returns by focusing on core businesses and building on its strengths to further develop and diversify. Recently, the financial team is given the tasks on the financial planning and analysis of the potential investments of the company. The team is instructed to analyse the available options that can help in the expansion of the business. Below are snapshots of activities that have been taken by the teams. PART A: Financial Assets The senior accountant of Platino Bhd recommends to the board of directors to build an investment portfolio to meet the long-term financial goals through financial assets investments. The budget allocated for the financial asset's investment is approximately RM3,300,000. The senior accountant elaborated to the board of directors that savings account can offer easy access and…You are Chief Financial Officer of the ABC Corporation. ABC has two divisions, one of which distributes alcohol, while the other manufactures bottles for brewers and beverage companies. The company is considering a capacity expansion project in the alcohol distribution division, and the Board of Directors has asked you to provide a financial analysis of the project. The project would require an initial investment of $100 million for a new distribution center. In addition, $20 million in additional working capital would need to be committed to the project. The working capital will be recovered at the end of the project life. The distribution center facilities would be depreciated on a straight-line basis over five years. At the end of five years, you estimate that the center will be sold for $20 million. The distribution center is expected to generate cash revenues of $85 million per year and cash operating costs of $50 million per year in each of the next five years. The…
- c. Courteney-Cox, Inc., is a Texas-based manufacturer and distributor of components and replacement parts for the auto, machinery, farm, and construction equipment industries. The company is presently funding a program of capital investment that is necessary to reduce production costs and thereby meet an onslaught of competition from low-cost suppliers located in Mexico and throughout Latin America. Courteney-Cox has a limited amount of capital available and must carefully weigh both the risks and potential rewards associated with alternative investments. In particular, the company seeks to weigh the advantages and disadvantages of a new investment project, project X, in light of two other recently adopted investment projects, project Y and project Z: Per Year Project X $10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 10,000 Year 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 PV of Cash Flow @ 5% Investment Outlay in 2000: Calculate the minimum certainty equivalent…Mace Manufacturing is in the process of analyzing its investment decision-making procedures. Two projects evaluated by the firm recently involved building new facilities in different regions, North and South. The basic variables surrounding each project analysis and the resulting decision actions are summarized in the following table: Basic variables North South Cost $7,000,000 $6,370,000 Life 12 years 12 years Expected return 7.8% 14.7% Least-cost financing Source Debt Equity Cost (after-tax) 5.1% 16.6% Decision Action Invest Don't invest Reason 7.8%>5.1% cost 14.7%<16.6% cost a. An analyst evaluating the North facility expects that the project will be financed by debt that costs the firm 5.1%. What recommendation do you think this analyst will make regarding the investment opportunity? b. Another analyst assigned to study the South facility believes that…Mace Manufacturing is in the process of analyzing its investment decision-making procedures. Two projects evaluated by the firm recently involved building new facilities in different regions, North and South. The basic variables surrounding each project analysis and the resulting decision actions are summarized in the following table: Basic variables North South Cost $7,000,000 $6,370,000 Life 12 years 12 years Expected return 7.8% 14.7% Least-cost financing Source Debt Equity Cost (after-tax) 5.1% 16.6% Decision Action Invest Don't invest Reason 7.8%>5.1% cost 14.7%<16.6% cost d. If the firm maintains a capital structure containing 40% debt and 60% equity, find its weighted average cost using the data in the table. e. If both analysts had used the weighted average cost calculated in part d, what recommendations would they have made regarding the…