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The Midland Energy Case Assignment is a team assignment.

Please read the following case and


accompanying spreadsheet carefully: Joel L. Heilprin & Timothy A. Luehman, Midland Energy Resources, Inc.:
Cost of Capital (Brief Case), Harvard Business Publishing (Product Number 4129-PDF-ENG). This case is
listed on the Resource page and available through your HBR course pack. Once you have read the case, work
in your teams to prepare a written case analysis that is 5-to-8 pages or no more than 10 PowerPoint Slides.

ead the case and accompanying spreadsheet carefully.


As either a 5-to-8 page paper or no more than 10 PowerPoint Slides, your team should craft a case analysis
that includes the following:

Describe Midland, its capital planning model and Janet Mortensen's role in the case.
Briefly explain the meaning of the following concepts: cost of capital, WACC, and CAPM.
Address what you use cost of capital to evaluate. How are Mortensens estimates used at
Midland?
Compute Midlands Corporate WACC. Be prepared to defend it and to discuss cost of debt and cost
of equity.
Answer: should Midland compute different WACC for each division? Why or why not?
Answer: if you were to compute a WACC for each division, how can we get asset betas for
divisions? How should comps be selected?
Calculate the WACC for the Petrochemicals Division. Think of the same issues you considered for
the Corporate WACC.