Case | HBS Case Collection | April 1975 (Revised November 1984)

Enzone Petroleum Corp.

by Thomas R. Piper

Abstract

A large integrated oil company is debating whether to switch from a single hurdle rate to multiple hurdle rates for project analysis purposes. Raises questions on: 1) determination of the cost of equity; 2) the usefulness of multiple hurdle rates to adjust for project risk; 3) differences between a project's risk and its impact on overall corporate risk; and 4) the limitations of project analysis and capital budget systems.

Keywords: Risk and Uncertainty; Cost; Investment Return; Equity; Capital Budgeting; Energy Industry;

Citation:

Piper, Thomas R. "Enzone Petroleum Corp." Harvard Business School Case 275-113, April 1975. (Revised November 1984.)