"Project Evaluation in Emerging Markets: Exxon Mobil, Oil, and Argentina" case study seeks to answer the question of whether Exxon Mobil should invest or not in the south of Argentina’s project $130 million at the beginning of 2006 in order to obtain the estimated annual cash flows over the years 2006-2011.
Javier Estrada; Gabriela Giannattasio; Lidia Nikolova
Harvard Business Review (IES182-PDF-ENG)
September 14, 2006
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Case answers for Project Evaluation in Emerging Markets: Exxon Mobil, Oil, and Argentina
This case solution includes an Excel file with calculations.
Chapter One: Introduction – Exxon Mobil
Exxon Mobil is the world’s largest integrated oil company. It engages in oil and gas exploration, production, supply, transportation, and marketing around the world.
Table 1: Exxon Mobil Company Profile
Chapter Two. Analysis of the Economy
Economic growth weakened unexpectedly in the fourth quarter of 2005, rising 1.1 percent, the slowest pace in three years, and clouding the immediate outlook for the economy, the government reported yesterday.
The intensity of the economic slowdown, which reduced yearly growth to 3.5 percent from 4.2 percent in 2004, surprised many forecasters. They had expected a sharp pickup in business investment in the final months of the year to take up some of the slack in consumer spending and had predicted an overall growth rate of 2.5 percent to 3 percent in the fourth quarter.
The weak economic data pleased investors, who pushed up the price of stocks in the expectation that the Federal Reserve, whose policy-making committee meets on Tuesday, might end its 18-month campaign to raise its benchmark interest rate — now at 4.25 percent — after it reaches 4.5 percent or 4.75 percent.
There are two categories of indicators, classified to forecast the global economic situation.
First, leading indicators signal future events. Bond yields, treasury rates, and interest rates of short- and long-term debt are a good leading indicator of the economy, which suggests that…