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Case
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Reference no. 286-008-1
Authors: Colin O Benjamin (Arthur Lok Jack Graduate School of Business)
Published in: 1986

Abstract

The case illustrates the application of a computer based investment appraisal model to evaluate a secondary recovery project in the petroleum sector in a developing country. Several indices of investment efficiency (eg payback period, discounted payback period, net present value, internal rate of return etc) can be computed and the impact of taxation demonstrated. Considerations of risk and uncertainty can be included in the analysis by carrying out appropriate sensitivity tests and risk analysis using Monte Carlo simulation to assess the impact of variations in key project parameters (oil price, project life, operating costs, discount rate) on the project''s viability. The use of a micro computer based spreadsheet (eg Multiplan, Visicalc, Supercalc) and an investment appraisal computer package (eg ICL''s PROSPER) can be usefully incorporated in the assignment.
Location:
Industry:
Size:
2,000 employees
Other setting(s):
1980-1982

About

Abstract

The case illustrates the application of a computer based investment appraisal model to evaluate a secondary recovery project in the petroleum sector in a developing country. Several indices of investment efficiency (eg payback period, discounted payback period, net present value, internal rate of return etc) can be computed and the impact of taxation demonstrated. Considerations of risk and uncertainty can be included in the analysis by carrying out appropriate sensitivity tests and risk analysis using Monte Carlo simulation to assess the impact of variations in key project parameters (oil price, project life, operating costs, discount rate) on the project''s viability. The use of a micro computer based spreadsheet (eg Multiplan, Visicalc, Supercalc) and an investment appraisal computer package (eg ICL''s PROSPER) can be usefully incorporated in the assignment.

Settings

Location:
Industry:
Size:
2,000 employees
Other setting(s):
1980-1982

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