INCLUDING RISK IN ECONOMIC FEASIBILITY ANALYSIS:A STOCHASTIC SIMULATION MODEL FOR BLUEBERRY INVESTMENT DECISIONS IN CHILE

ABSTRACT The traditional method of net present value (NPV) to analyze the economic profitability of an investment (based on a deterministic approach) does not adequately represent the implicit risk associated with different but correlated input variables. Using a stochastic simulation approach for evaluating the profitability of blueberry (Vaccinium corymbosum L.) production in Chile, the objective of this study is to illustrate the complexity of including risk in economic feasibility analysis when the project is subject to several but correlated risks. The results of the simulation analysis suggest that the non-inclusion of the intratemporal correlation between input variables underestimate the risk associated with investment decisions. The methodological contribution of this study illustrates the complexity of the interrelationships between uncertain variables and their impact on the convenience of carrying out this type of business in Chile. The steps for the analysis of economic viability were: First, adjusted probability distributions for stochastic input variables (SIV) were simulated and validated. Second, the random values of SIV were used to calculate random values of variables such as production, revenues, costs, depreciation, taxes and net cash flows. Third, the complete stochastic model was simulated with 10,000 iterations using random values for SIV. This result gave information to estimate the probability distributions of the stochastic output variables (SOV) such as the net present value, internal rate of return, value at risk, average cost of production, contribution margin and return on capital. Fourth, the complete stochastic model simulation results were used to analyze alternative scenarios and provide the results to decision makers in the form of probabilities, probability distributions, and for the SOV probabilistic forecasts. The main conclusion shown that this project is a profitable alternative investment in fruit trees in Chile.

Feasibility analysis for biofuel production and investment recommendation

A FGV Projetos posiciona-se com destaque no desenvolvimento de projetos e estudos sobre biocombustíveis. Especialistas no assunto apontam para a viabilidade da produção de biocombustíveis em diversos países, e recomendam investimentos em toda a cadeia produtiva, específicos para cada localidade. Isso permitirá aos países que desejam reduzir a dependência por combustíveis fósseis, tais como o petróleo, a diversificação da matriz energética, o aumento do emprego no campo, e uma melhora do saldo comercial. Este documento apresenta síntese dos trabalhos realizados e em desenvolvimento, e tem como base os estudos de viabilidade para a produção de biocombustíveis de El Salvador e da República Dominicana.

Controlled time of arrival feasibility analysis

Previous research studies and operational trials have shown that using the airborne Required Time of Arrival (RTA) function, an aircraft can individually achieve an assigned time to a metering or merge point accurately. This study goes a step further and investigates the application of RTA to a real sequence of arriving aircraft into Melbourne Australia. Assuming that the actual arrival times were Controlled Time of Arrivals (CTAs) assigned to each aircraft, the study examines if the airborne RTA solution would work. Three scenarios were compared: a baseline scenario being the actual flown trajectories in a two hour time-span into Melbourne, a scenario in which the sequential landing slot times of the baseline scenario were assigned as CTAs and a third scenario in which the landing slots could be freely redistributed to the inbound traffic as CTAs. The research found that pressure on the terminal area would sometimes require aircraft to lose more time than possible through the RTA capability. Using linear holding as an additional measure to absorb extensive delays, up to 500NM (5%) of total track reduction and 1300kg (3%) of total fuel consumption could be saved in the scenario with landing slots freely distributed as CTAs, compared to the baseline scenario. Assigning CTAs in an arrival sequence requires the ground system to have an accurate trajectory predictor to propose additional delay measures (path stretching, linear holding) if necessary. Reducing the achievable time window of the aircraft to add control margin to the RTA function, had a negative impact and increased the amount of intervention other than speed control required to solve the sequence. It was concluded that the RTA capability is not a complete solution but merely a tool to assist in managing the increasing complexity of air traffic.

Feasibility analysis of the transmission for a flywheel/heat engine hybrid propulsion system /

"MTI-71TR75."

Integrated approach to project feasibility analysis:a case study

Feasibility studies of industrial projects consist of multiple analyses carried out sequentially. This is time consuming and each analysis screens out alternatives based solely on the merits of that analysis. In cross-country petroleum pipeline project selection, market analysis determines throughput requirement and supply and demand points. Technical analysis identifies technological options and alternatives for pipe-line routes. Economic and financial analysis derive the least-cost option. The impact assessment addresses environmental issues. The impact assessment often suggests alternative sites, routes, technologies, and/or implementation methodology, necessitating revision of technical and financial analysis. This report suggests an integrated approach to feasibility analysis presented as a case application of a cross-country petroleum pipeline project in India.

A state-of-the-art review and feasibility analysis of high altitude wind power in Northern Ireland

In many countries wind energy has become an indispensable part of the electricity generation mix. The opportunity for ground based wind turbine systems are becoming more and more constrained due to limitations on turbine hub heights, blade lengths and location restrictions linked to environmental and permitting issues including special areas of conservation and social acceptance due to the visual and noise impacts. In the last decade there have been numerous proposals to harness high altitude winds, such as tethered kites, airfoils and dirigible based rotors. These technologies are designed to operate above the neutral atmospheric boundary layer of 1,300 m, which are subject to more powerful and persistent winds thus generating much higher electricity capacities. This paper presents an in-depth review of the state-of-the-art of high altitude wind power, evaluates the technical and economic viability of deploying high altitude wind power as a resource in Northern Ireland and identifies the optimal locations through considering wind data and geographical constraints. The key findings show that the total viable area over Northern Ireland for high altitude wind harnessing devices is 5109.6 km2, with an average wind power density of 1,998 W/m2 over a 20-year span, at a fixed altitude of 3,000 m. An initial budget for a 2MW pumping kite device indicated a total cost £1,751,402 thus proving to be economically viable with other conventional wind-harnessing devices.

Economic feasibility analysis of the implementation of a high value-added molecule extraction system in an olive oil mill

The production of olive oil generates several by-products that can be seen as an additional business opportunity. Among them are the olive pits, already used for heat and/or electricity generation in some mills. They contain compounds that are commercially very interesting and, if recovered, contribute to the sustainability of the olive mills. The work presented in this paper is a preliminary evaluation of the economic feasibility of implementing a system based on a batch prototype with 1 m3 for the extraction of high value-added bioactive molecules from olive pits that are separated during the production of virgin olive oil. For the analysis, a small representative olive mill in Portugal was considered and the traditional Discounted Cash Flow Method was applied. Based on the assumptions made, the simple payback for implementation a system for the extraction of value-added molecules from the olive pits is around 7 years.

Fast pyrolysis in circulating fluidized bed: feasibility study

Today the limitedness of fossil fuel resources is clearly realized. For this reason there is a strong focus throughout the world on shifting from fossil fuel based energy system to biofuel based energy system. In this respect Finland with its proven excellent forestry capabilities has a great potential to accomplish this goal. It is regarded that one of the most efficient ways of wood biomass utilization is to use it as a feedstock for fast pyrolysis process. By means of this process solid biomass is converted into liquid fuel called bio-oil which can be burnt at power plants, used for hydrogen generation through a catalytic steam reforming process and as a source of valuable chemical compounds. Nowadays different configurations of this process have found their applications in several pilot plants worldwide. However the circulating fluidized bed configuration is regarded as the one with the highest potential to be commercialized. In the current Master’s Thesis a feasibility study of circulating fluidized bed fast pyrolysis process utilizing Scots pine logs as a raw material was conducted. The production capacity of the process is 100 000 tonne/year of bio-oil. The feasibility study is divided into two phases: a process design phase and economic feasibility analysis phase. The process design phase consists of mass and heat balance calculations, equipment sizing, estimation of pressure drops in the pipelines and development of plant layout. This phase resulted in creation of process flow diagrams, equipment list and Microsoft Excel spreadsheet that calculates the process mass and heat balances depending on the bio-oil production capacity which can be set by a user. These documents are presented in the current report as appendices. In the economic feasibility analysis phase there were at first calculated investment and operating costs of the process. Then using these costs there was calculated the price of bio-oil which is required to reach the values of internal rate of return of 5%, 10%, 20%, 30%, 40%, and 50%.

Uncertainty and feasibility studies: an Italian case study

Uncertainty affects all aspects of the property market but one area where the impact of uncertainty is particularly significant is within feasibility analyses. Any development is impacted by differences between market conditions at the conception of the project and the market realities at the time of completion. The feasibility study needs to address the possible outcomes based on an understanding of the current market. This requires the appraiser to forecast the most likely outcome relating to the sale price of the completed development, the construction costs and the timing of both. It also requires the appraiser to understand the impact of finance on the project. All these issues are time sensitive and analysis needs to be undertaken to show the impact of time to the viability of the project. The future is uncertain and a full feasibility analysis should be able to model the upside and downside risk pertaining to a range of possible outcomes. Feasibility studies are extensively used in Italy to determine land value but they tend to be single point analysis based upon a single set of “likely” inputs. In this paper we look at the practical impact of uncertainty in variables using a simulation model (Crystal Ball ©) with an actual case study of an urban redevelopment plan for an Italian Municipality. This allows the appraiser to address the issues of uncertainty involved and thus provide the decision maker with a better understanding of the risk of development. This technique is then refined using a “two-dimensional technique” to distinguish between “uncertainty” and “variability” and thus create a more robust model.

Feasibility of changeable message signs and highway advisory radio for freeway maintenance. Final report.

Texas State Department of Highways and Public Transportation, Transportation Planning Division, Austin

A feasibility study of a sealed safety monitor for trucks carrying LNG and other hazardous materials. Final report.

Energy Department, Office of Operational Safety Programs, Washington, D.C.

Feasibility study for an improved acoustic probe for road roughness profiling.

Federal Highway Administration, Washington, D.C.

Identification and feasibility test of specialized rural pedestrian safety training. Volume 3: PEDSAFE junior/senior high school materials. Final report.

National Highway Traffic Safety Administration, Washington, D.C.

Identification and feasibility test of specialized rural pedestrian safety training. Volume 4: PEDSAFE audiovisual scripts. Final report.

National Highway Traffic Safety Administration, Washington, D.C.