scholarly journals RISK CONSIDERATION IN THE INVESTMENT PLAN OF CREATING A VINEYARD

2019 ◽  
pp. 100-110
Author(s):  
JOZEF REPISKÝ
Keyword(s):  
Risk Factors ◽  
Sensitivity Analysis ◽  
Probability Distribution ◽  
Net Present Value ◽  
Simulation Analysis ◽  
Investment Project ◽  
Investment Strategy ◽  
Balance Model ◽  
Present Value ◽  
Risk Quantification

The paper is focused on creation and evaluation of the investment project of establishing vineyard with risk taken into consideration via a simulation model. The basis of this work was the creation of a multi period balance model and formation of different variants of the individual projects which differ in production volume and mean of financing. The model accepts to full extent initial decisions on the supposed yields, selling prices and the way of depreciation of vineyard and its fencing. In other parts of the model, the investor introduces only prices per unit of labour to services such as pre-agglomeration of land, vineyard plantation and its cultivation in different years, fencing and supporting construction and all other calculations are done automatically representing the intermediate results and model outputs. Part of the model covering the loan gives information on total initial costs of the projects including working capital and total capital costs. They are financed from equity, loans, and subsidies. The main evaluation criterion of the deterministic calculations was the net present value which takes into consideration the time factor and belongs among the dynamic methods. By means of sensitivity and simulation analysis is possible to identify an appropriate investment strategy under the risk conditions. The risk factors, which were identified by sensitivity analysis, are defined as random variables with certain probability distribution. Critical values of target criterion give information value which we can expect with willingness to tolerate given risk quantification. The spreadsheet model allows to simulate various financial investment and credit and depreciation procedures. The multi-period model allows for the assessment of individual investment intentions through the Net Present Value indicator and through the sensitivity and simulation analysis to identify the most appropriate investment strategy under risk conditions. The risk factors, which were identified by sensitivity analysis are defined as random variables with certain probability distribution in stochastic model. Critical values of target criterion give information which value can we expect with willingness to tolerate given risk quantification. The multi-period balance model can also be transformed into an optimization model by a suitable adjustment. Key words: investment decision making, net present value, risk analysis, modeling analysis, risk, uncertainty, viticulture, investment project.

scholarly journals EVALUATION OF INVESTMENT PROJECT FOR BIOMASS USAGE WITH RISK CONSIDERATION

2015 ◽  
Author(s):  
Jozef REPISKÝ ◽  
Mária GRÁCOVÁ
Keyword(s):  
Net Present Value ◽  
Simulation Analysis ◽  
Investment Project ◽  
Investment Strategy ◽  
Distribution Functions ◽  
Information Value ◽  
Balance Model ◽  
Production Volume ◽  
Technical Parameters ◽  
The Individual

The paper is focused on a creation and evaluation of the investment project of pelletisation line purchase with a risk taken into consideration via a simulation model. The decision making subject was offered a choice of two pelletisation lines differentiating in technical parameters and purchase costs. The fundament of this work was a creation of a multi period balance model and formation of ten variants of the individual projects which differ in production volume and mean of financing. The main evaluation criterion of the deterministic calculations was a net present value which takes into consideration the time factor and belongs among the dynamic methods. By means of sensitivity and simulation analysis is possible to identify an appropriate investment strategy under the risk conditions. The risk factors, which were identified by sensitivity analysis, are defined as random variables with certain probability distribution. Critical values of target criterion give information value which we can expect with willingness to tolerate given risk quantification. The comparison of distribution functions of investment alternatives allows the identification of the optimal strategy. On the basis of the gained results we came to the conclusion that the purchase of the pelletisation line is a profitable investment which can increase the value of the company itself.

scholarly journals An Analysis of the Effectiveness of Two Rainwater Harvesting Systems Located in Central Eastern Europe

Water ◽  
2019 ◽  
Vol 11 (3) ◽  
pp. 458 ◽  
Author(s):  
Agnieszka Stec ◽  
Martina Zeleňáková
Keyword(s):  
Sensitivity Analysis ◽  
Net Present Value ◽  
Rainwater Harvesting ◽  
Payback Period ◽  
Practical Aspect ◽  
Financial Ratios ◽  
Present Value ◽  
Toilet Flushing ◽  
Harvesting Systems ◽  
The Impact

Decentralized water systems are perceived as solutions that not only save water, but also as a way to partially or completely become independent from centralized suppliers. Taking this into account, an analysis of the effectiveness of rainwater harvesting systems (RWHS) for toilet flushing in existing academic facilities located in Poland and in Slovakia was carried out. The tests took into account the different volumes of storage tanks collecting rainwater. On the basis of two financial ratios, namely Net Present Value and Discounted Payback Period, the profitability of these systems was also assessed. The research was extended by the sensitivity analysis, which allowed determination of the impact of changes in individual cost components on the financial effectiveness of the investments considered. The results obtained clearly showed that the implementation of RWHS in the dormitory in Rzeszów was unprofitable for all tank capacities tested, and the payback period significantly exceeded the period of 30 years accepted for the analysis. Completely different results were obtained for RWHS in a dormitory located in the city of Košice, for which the financial ratios NPV (Net Present Value) and DPP (Discounted Payback Period) were very favorable. It was also confirmed by the results of the sensitivity analysis. The use of rainwater for toilet flushing caused that it was possible to achieve water savings of an average of 29% and 18%, respectively, for facilities located in Slovakia and Poland. The results of the research have a practical aspect and can provide an indication for potential investors and managers of academic facilities, similar to those analyzed in the article. Taking into account that in many countries water and sewage rates are significantly higher than in Poland and Slovakia, the cost-effectiveness of using the analyzed installation options in these countries could be even higher.

scholarly journals Assessing the Option to Abandon an Investment Project by the Binomial Options Pricing Model

2016 ◽  
Vol 2016 ◽  
pp. 1-12 ◽  
Author(s):  
Salvador Cruz Rambaud ◽  
Ana María Sánchez Pérez
Keyword(s):  
Real Option ◽  
Net Present Value ◽  
Investment Project ◽  
Mathematical Expression ◽  
Options Pricing ◽  
Pricing Model ◽  
Operational Flexibility ◽  
Present Value ◽  
Project Appraisal ◽  
Financial Options

Usually, traditional methods for investment project appraisal such as the net present value (hereinafter NPV) do not incorporate in their values the operational flexibility offered by including a real option included in the project. In this paper, real options, and more specifically the option to abandon, are analysed as a complement to cash flow sequence which quantifies the project. In this way, by considering the existing analogy with financial options, a mathematical expression is derived by using the binomial options pricing model. This methodology provides the value of the option to abandon the project within one, two, and in general n periods. Therefore, this paper aims to be a useful tool in determining the value of the option to abandon according to its residual value, thus making easier the control of the uncertainty element within the project.

scholarly journals Use of the correlation between input variables in estimating the risk of feedlot finishing of steers and young steers

2014 ◽  
Vol 86 (2) ◽  
pp. 945-954 ◽  
Author(s):  
PAULO S. PACHECO ◽  
JOÃO RESTLE ◽  
LEONIR L. PASCOAL ◽  
FABIANO N. VAZ ◽  
RICARDO Z. VAZ ◽  
...  
Keyword(s):  
Sensitivity Analysis ◽  
Stochastic Dominance ◽  
Net Present Value ◽  
Latin Hypercube Sampling ◽  
Risk Estimate ◽  
Present Value ◽  
Random Input ◽  
Financial Indicator ◽  
Input Variables ◽  
Diet Intake

The objective of this study was to evaluate the risk of feedlot finishing of steers (22.8 months) and young steers (15.2 months), using or not a correlation between the random input variables (data collected from 2004 to 2010) in the simulation of the Net Present Value (NPV) financial indicator. The animals were fed a diet containing roughage:concentrate ratio of 60:40 for 34 and 143 days, respectively, until they had reached a predetermined slaughter weight of 430 kg. For the NPV simulation, Latin Hypercube sampling was used, with 2000 interactions. The stochastic dominance analysis, test of differences between pairs of curves of cumulative distributions and sensitivity analysis were carried out. The NPV simulation using the correlation resulted in the best option for risk estimate. The confinement of young steers was the alternative of investment most viable than confinement of steers (NPV ≥ 0 of 80.4 vs. 62.3% in the simulation with correlation, respectively). Sensitivity analysis determined the following items had the greatest impact on the estimate of NPV: prices of fat and thin cattle, initial and final weights, diet costs, minimum rate of attractiveness and diet intake.

New Construction Methodology - A Strategic Approach of Financial and Market Feasibility for Geothermal Cogeneration Plant

2014 ◽  
Vol 984-985 ◽  
pp. 774-783
Author(s):  
Prakash Arul Jose ◽  
Rajesh Prasanna ◽  
Fleming Prakash
Keyword(s):  
Sensitivity Analysis ◽  
Net Present Value ◽  
Financial Analysis ◽  
Investment Project ◽  
Rate Of Return ◽  
Internal Rate Of Return ◽  
Cogeneration Plant ◽  
Investment Projects ◽  
Internal Rate ◽  
Financial Feasibility

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.

scholarly journals Sensitivity Analysis of Decorative Plant Business in Kendari City (Case Study on Dahlia Ornamental Plant Business)

2021 ◽  
Vol 1 (1) ◽  
pp. 13
Author(s):  
Rabiatul Adawiah Gasnawati ◽  
Abdi Abdi ◽  
Awaluddin Hamzah
Keyword(s):  
Sensitivity Analysis ◽  
Net Present Value ◽  
Payback Period ◽  
Ornamental Plant ◽  
Production Costs ◽  
Rate Of Return ◽  
Internal Rate Of Return ◽  
Present Value ◽  
Benefit Ratio

The purpose of this study was to determine the sensitivity of ornamental plant business in Kendari City as a case study on dahlia ornamental plant business. This research was conducted in Kendari City which was determined purposively on the dahlia ornamental plant business. The research was conducted from July to November 2019. The analysis used in this study is an analysis of efficiency and income consisting of net present value (NPV) income benefit ratio (NBCR), internal rate of return (IRR), payback period (PBP). The results of the sensitivity analysis of ornamental plant businesses with increased production costs by 5% and selling prices decreased by 5%, the value of the NPV, NBCR, IRR and payback period shows a good value so that the ornamental plant business is feasible to be cultivated because it can return all investment costs used

scholarly journals Analisis Usaha Agroindustri Minuman Tradisional Kunyit Asam di Paon Jamu (Curcuma domestica Val. – Tamarindus indica L.)

2020 ◽  
Vol 8 (1) ◽  
pp. 9
Author(s):  
Luh Putu Melia Dewi ◽  
Sri Mulyani ◽  
I Ketut Satriawan
Keyword(s):  
Sensitivity Analysis ◽  
Net Present Value ◽  
Payback Period ◽  
Added Value ◽  
Rate Of Return ◽  
Internal Rate Of Return ◽  
Tamarindus Indica ◽  
Present Value ◽  
Operational Costs ◽  
Business Analysis

Paon Jamu traditional beverage business is one of the traditional beverage businesses in the Tanjung Benoa area. Judging from the development of his business, Paon Jamu is one of the businesses that have just been established including many similar traditional beverage businesses. This study aims to determine the financial feasibility of the tamarind turmeric beverage business, determine the added value generated, determine the feasibility of a tamarind turmeric beverage business if there is an increase in operational costs and a decrease in revenue using a sensitivity analysis. Tamarind turmeric beverage business is feasible to run, the Net Present Value result is Rp. 6.144.470 for 300 ml packaging. Internal Rate of Return of 13% for 300 ml packaging and 14% indicates that the rate of return is greater than the specified bank interest rate. Payback Period for 2 years 5 months for 300 ml packaging. The B / C ratio is 1,42 for 300 ml packages. The added value of the business of turmeric acid is the added value obtained is Rp. 49.416 for a 300 ml package with a ratio of 47% The sensitivity analysis scenario shows that 300 ml package is sensitive to a 3 and 4% reduction in income in scenario II and III. Keywords: Tamarind turmeric, business analysis, Paon Jamu

scholarly journals The Valuation of the Operational Flexibility of the Energy Investment Project Based on a Gas-Fired Power Plant

Energies ◽  
2020 ◽  
Vol 13 (7) ◽  
pp. 1567 ◽  
Author(s):  
Dominik Kryzia ◽  
Michał Kopacz ◽  
Katarzyna Kryzia
Keyword(s):  
Monte Carlo ◽  
Net Present Value ◽  
Investment Project ◽  
Combined Cycle ◽  
Operational Flexibility ◽  
Present Value ◽  
Discounted Cash Flow ◽  
Energy Investment ◽  
Significance Level ◽  
Technical Parameters

This paper presents an attempt to the valuation of the operational flexibility of the energy investment project based on the example of combined cycle gas turbine (CCGT). For this purpose, the real options approach (ROA), net present value (NPV) method, and the Monte Carlo (MC) simulation have been used. Motivations to take up such a topic result from the fact that traditional valuation methods neglect flexibility embedded in CCGT assets. Operational flexibility was defined as the switching option to dynamically shut down and restart gas units. Valuation of the operational flexibility, the project’s extended net present value (XNPV), was based on a discounted cash flow model. The Monte Carlo simulation, allowing for better replication of the stochastic nature of market factors and some technical parameters, was introduced to the valuation model. The obtained results indicate that the value of the options significantly influences the NPV of the analyzed technology and its risk profile. The NPV was calculated at −169.1 million USD, while the XNPV amounted to 102.5 million USD. This difference, compared to the NPV distribution range at a significance level of 0.05, was more than 8.1% (almost 10.4% for α = 0.1). The results achieved help to explain the significance of the operational flexibility in the modeling profitability of CCGT technologies.

Using Outsourced Logistics Services (4pl)

2013 ◽  
pp. 360-375
Author(s):  
Vasileios Giotopoulos ◽  
Dimitrios E. Koulouriotis ◽  
Vasileios Moustakis
Keyword(s):  
Sensitivity Analysis ◽  
Discount Rate ◽  
Legal System ◽  
Net Present Value ◽  
Legal Environment ◽  
Present Value ◽  
Organizational Models ◽  
Logistics Outsourcing ◽  
Logistics Services ◽  
Logistics Enterprises

The objective of this chapter is the study of the economical and legal environment in which logistics enterprises operate in Greece. Firstly, there is a presentation of logistics outsourcing and the existing 3PL and 4PL organizational models as well as an analysis of the economical and legal system which influences the operation of logistics ventures in Greece and a presentation of the funding possibilities according to Greek law. An economical sustainability study is being conducted according to the Net Present Value method (NPV), and two types of ventures are studied: an asset based venture, and a non asset based venture. At the end of this chapter, there is a sensitivity analysis with respect to the discount rate that is used in the NPV (Net Present Value) method. The results of this analysis showed that a change of the discount rate has significant consequences on the economics of the project.

Sign in / Sign up

Export Citation Format

Share Document