Pioneer Petroleum

Essay specific features

 

Issue:

Business

 

Written by:

David K

 

Date added:

June 13, 2016

 

Level:

University

 

Grade:

B

 

No of pages / words:

5 / 1225

 

Was viewed:

4562 times

 

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Essay content:

Tax rate was 34%. From the formula: Rwacc = Equity/(Equity+Debt)*Rs + Debt/(Equity+Debt) * (Rb*(1-tc)) Rwacc = 0.5*10% + 0.5*7.9% = 9% There maybe issue with the future debt – equity ratios being used as opposed to the current ratio. However we think it is right to use the forecasted ratio rather than the current ratio...
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The target weights are expected to prevail over the life of the firm or project. Conversely to define the weights of debt and equity, Pioneer should look at market value, because it is closer to the real world. In some instances for short term projects, the market values would be helpful. Pioneer should continue to use multiple divisional hurdle rates in evaluating projects and allocating investment funds among divisions...
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