Buisness
Submitted by: Submitted by lsmooth311
Views: 119
Words: 1238
Pages: 5
Category: Business and Industry
Date Submitted: 04/20/2014 03:00 PM
Corporate
Finance
Instructor:
David
Greenwald,
Ph.D.
Assignment
#1
Problem
1:
Valuing
costs
and
benefits
As
an
oil
refiner,
you
are
able
to
produce
$76
worth
of
unleaded
gasoline
from
one
barrel
of
Alaska
North
Slope
(ANS)
crude
oil.
Because
of
its
lower
sulfur
content,
you
can
produce
$77
worth
of
unleaded
gasoline
from
one
barrel
of
West
Texas
Intermediate
(WTI)
crude.
A)
Assuming
you
currently
have
10,000
Bbls
of
WTI
crude,
another
oil
refiner
is
offering
to
trade
you
10,150
Bbls
of
ANS
crude
oil
for
10,000
Bbls
of
WTI
crude
oil.
Would
you
be
benefiting
from
this
trade
if
you
take
this
trade
or
not?
If
you
do,
what
is
your
added
benefit?
(1) (2) (3) (4) -‐$1,400
$1,400
-‐$3,908
$3,908
Explain
your
answer.
B)
Assuming
you
currently
have
10,000
Bbls
of
WTI
crude,
the
added
benefits
(or
cost)
to
you
if
you
were
to
sell
the
10,000
Bbls
of
WTI
crude
and
use
the
proceeds
to
purchase
and
refine
ANS
crude
is
closest
to:
Use
the
information
below
to
solve
the
problem.
Alaska
North
Slope
Crude
Oil
(ANS):
$71.75/Bbl
West
Texas
Intermediate
Crude
Oil
(WTI):
$73.06/Bbl
(1) (2) (3) (4) -‐$1,400
$1,400
-‐$3,908
$3,908
...
