Application of sensitivity analysis in investment project evaluation under uncertainty and risk

Abstract-While constructing the geothermal cogeneration plant the success of the projects depends upon its financial and market feasibility. A new optimization method is used to estimate financing requirements of investment projects will be presented, as well as a new method to predict the optimal year to sell the investment. A case study is used to illustrate the use of a model to assess the financial feasibility of a geothermal cogeneration plant. The conclusion is that Net Present value , Internal rate of Return and Modified Internal rate of Return should be used to assess financial feasibility of investment projects. In addition to calculating the financial feasibility criteria, assessment models should allow the user to perform sensitivity analysis, scenario analysis, and simulation to analyze risk associated with the investment project. Risk probability matrix is used to obtain the risk priority , which then continued with financial analysis for the feasibility study and also sensitivity analysis. The study shows that the parameter investment value will be increased when treatment is done on risk.Keywords:Financial and market feasibility, Geo thermal cogeneration plant, Environmental Aspects, Sensitivity analysis.

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The Application of Case Method in the Teaching of Investment Project Evaluation

Journal of Contemporary Educational Research ◽

10.26689/jcer.v5i2.1833 ◽

2021 ◽

Vol 5 (2) ◽

Author(s):

Yixin He

Keyword(s):

Business Management ◽

Investment Project ◽

The United States ◽

Project Evaluation ◽

Class Discussion ◽

Case Method ◽

Teaching Mode ◽

Thinking Ability ◽

Unique Style

Case Method originated in the 1920s and was initiated by Harvard Business School in the United States. At that time, it adopted a unique style of case study, which was based on real situations or events in business management, in this way, it is helpful to cultivate and develop students’ active participation in class discussion. For investment students, specialized courses such as Investment Project Evaluation and corporate finance are concentrated in the upper grades, and in the freshman, sophomore phase has completed the Finance, finance, macroeconomics and other basic courses. On the basis of students’ existing knowledge structure, the course “Investment Project Evaluation” needs to fully tap students’ potential in learning and train students’ practical problem-solving ability, to cultivate students’ thinking ability of combining theoretical knowledge with practical cases, to avoid the teaching mode of “I tell you to listen”, and to guide students to think, analyze and solve problems actively.

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Problematic methodological questions of investment project evaluation

Management and Organization: Concepts, Tools and Applications ◽

10.18515/dbem.m2017.n02.ch12 ◽

2017 ◽

pp. 145-160

Author(s):

Mária Illés

Keyword(s):

Investment Project ◽

Project Evaluation

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Sensitivity analysis as a decision-making tool for the implementation of an investment project in mining industry

Izvestiya of Saratov University New Series Series Economics Management Law ◽

10.18500/1994-2540-2021-21-3-295-303 ◽

2021 ◽

Vol 21 (3) ◽

pp. 295-303

Author(s):

Elena A. Pozdnyakova ◽

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Liudmila A. Ramenskaya ◽

Dmitrii S. Voronov ◽

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...

Keyword(s):

Sensitivity Analysis ◽

Large Scale ◽

Quantitative Methods ◽

Mining Industry ◽

Commodity Prices ◽

Investment Project ◽

Technical Equipment ◽

Investment Projects ◽

Sensitivity Analysis Method ◽

Mining Projects

Introduction. Russian mining companies need to implement large-scale investment projects due to a variety of internal and external reasons. Projects are aimed at the development of new deposits, technical equipment and the modernization of existing ones. To make substantiated management decisions, a toolkit for analyzing the risks of investment projects is required. Theoretical analysis. The section contains the need to apply quantitative methods for assessing investment risks based on cash flow modeling. We have analyzed the possibility of the use of sensitivity analysis techniques, real options and Monte Carlo methods for the quantitative assessment of the mining industry investment projects risks. The result includes a justification of the feasibility of applying the sensitivity analysis method at the early stages of an investment project. Empirical analysis. The sensitivity analysis tested metrics such as production volumes, commodity prices, capital and operating costs on two mining projects. It was found out that the projects under consideration are the most sensitive to changes in the price of commercial products. Results. Sensitivity analysis is a useful tool for risk analysis of investment projects. The application of this method to an investment project in the mining industry should be carried out taking into account the industry specifics.

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