In 1992, the Enron Development Corporation, a Subsidiary of the Houston-Based

question 83

Multiple Choice

In 1992, the Enron Development Corporation, a subsidiary of the Houston-based energy company, signed a contract to build the largest-ever power plant in India, requiring a total investment of $2.8 billion. After Enron had spent nearly $300 million, the project was canceled by Hindu nationalist politicians in the Maharashtra state where the plant was to be built. Which of the following are true?

• A)Upon the news release of the project cancellation, Enron's share price fell immediately by about 10 percent.
• B)In the process of structuring the deal, Enron made a profound political miscalculation: Instead of waiting for the next election results, Enron rushed to close the deal and began construction, apparently believing that a new government would find it difficult to unwind the deal when construction was already under way.
• C)Enron had the last laugh, however when they went bankrupt and left the power plant unfinished.
• D)All of the above

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