Investment Decision Making Through Risk Analysis

Business owners, managers, and entrepreneurs are frequently faced with investment decisions. Capital investment opportunities, new product introduction, make or buy decisions, and portfolio diversity typify commonly encountered choices. This paper examines how a simulation model is used to perform r...

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Bibliographic Details
Published inJournal of business & entrepreneurship Vol. 3; no. 1; p. 115
Main Authors Willis, T Hillman, Riner, Sam, Aby, Carroll D
Format Journal Article
LanguageEnglish
Published Durant Association for Small Business and Entrepreneurship 01.03.1991
Subjects
Cash flow
Decision making
Decision trees
Drilling
Investment policy
Management decisions
Monte Carlo simulation
Oil exploration
Oil fields
Oil wells
Payback periods
Prices
Probability distribution
Risk assessment
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Summary:Business owners, managers, and entrepreneurs are frequently faced with investment decisions. Capital investment opportunities, new product introduction, make or buy decisions, and portfolio diversity typify commonly encountered choices. This paper examines how a simulation model is used to perform risk analysis for investment decisions. The model is illustrated with an evaluation of investment return potential for an oil exploration opportunity. The model is applied to analyze the investment attractiveness for a variety of oil prices and production rate conditions. [PUBLICATION ABSTRACT]
ISSN:1042-6337