Exxon Mobile Argentina Project

2051 WordsJul 26, 20129 Pages
hhgregg hhgregg This document explores an oil investment project in Argentina. We will provide a capital management analysis using discount rate calculations that account for the project be in a foreign country. Additionally, we will explore the NPV and IRR for this project. Lastly, we will submit our recommendation. This document explores an oil investment project in Argentina. We will provide a capital management analysis using discount rate calculations that account for the project be in a foreign country. Additionally, we will explore the NPV and IRR for this project. Lastly, we will submit our recommendation. Exxon-Mobile The Argentina Project Exxon-Mobile The Argentina Project Exxon-Mobil Mobil (XOM) is a long…show more content…
These methods are specifically used to calculate the risks involved with making investment decisions in foreign countries. Please understand that the lower the number the easier it is to generate a profit. Conversely, the higher the number, the more difficult it will be to be profitable. Argentina 's Projects Discount Rates | Discount Rates | | Lessard Method | 8.2% | Godfrey-Espinosa | 17.7% | Goldman Sachs | 18.4% | Salomon Smith Barney I | 7.9% | Salomon Smith Barney II | 12.9% | Salomon Smith Barney III | 9.6% | Please consider the Salomon Smith Barney rates enclosed by the red box. We believe that these rates will be your best indicator of future profitability for this project. After reviewing each methodology, we recommend that Exxon-Mobil consider the SSB method as part of your analysis. We make this recommendation based on the fact this developing the discount rates using this method allows you to take into account the following factors that could have an impact on your company. These factors include: access to Global Capital Markets, the Political Risk, and the importance of Exxon-Mobil making an investment in Argentina. In a report published on July 26, 2002 by Salomon Smith Barney/Citigroup, an illustration is provided which highlights the usage of Political Risk Premium which is a key factor in development of this discount rate. Most importantly, by using this
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