Including Risk in Economic Feasibility Analyses: The Case of Ethanol Production in Texas

The widespread use of personal computers and spreadsheet models for feasibility studies makes risk-based Monte Carlo simulation analysis of proposed investments a relatively simple task. Add-in simulation packages for Microsoft® Excel can be used to make spreadsheet models stochastic. Rather than basing investment decisions on point estimates, investors can easily estimate the implied distributions of returns for uncertain investments and calculate the risk of an investment as well as the probability of success. The benefits of using Monte Carlo simulation to analyze a risky investment are demonstrated using an ethanol plant as an example.


Issue Date:
2007
Publication Type:
Journal Article
DOI and Other Identifiers:
0738-8950 (Other)
PURL Identifier:
http://purl.umn.edu/62291
Published in:
Journal of Agribusiness, Volume 25, Number 2
Page range:
115-132
Total Pages:
18




 Record created 2017-04-01, last modified 2017-08-25

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