Discuss the below:
Scenario:
ExxonMobil is too acquire XTO Energy. Cost of the acquisition to Exxon is $41 billion dollars
Deal will allow ExxonMobil to add to its upstream ( exploration & development), by way of engaging in development of shale and unconventional natural gas resources.
In addition, ExxonMobils downstream is chemcials and refining of crude oil into a variety of consumer and industrial products.
How do you think the company should approach the determinationn of its Cost of Capital for making new Capital investment decisions ?