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1、技术经济学英文版演示文稿C31Stillwatersrundeep.流静水深流静水深,人静心深人静心深Wherethereislife,thereishope。有生命必有希望。有生命必有希望经济评价原理：利润最大化原理利润最大化原理 = B C BBenefit, CEconomic Costs C：投入各种要素的机会成本，包括企：投入各种要素的机会成本，包括企业家家的正常利的正常利润。 超超额利利润。计算算 的公式如下：的公式如下：项目不仅能达到正常利润水平，且有超额利润。项目不仅能达到正常利润水平，且有超额利润。项目仅能达到正常利润水平。项目仅能达到正常利润水平。项目不能达到正常利润水平（
2、但并不意味着亏损）项目不能达到正常利润水平（但并不意味着亏损）项目不仅能达到正常利润水平，且有超额利润。项目不仅能达到正常利润水平，且有超额利润。项目仅能达到正常利润水平。项目仅能达到正常利润水平。项目不能达到正常利润水平（但并不意味着亏损）项目不能达到正常利润水平（但并不意味着亏损）项目不仅能达到正常利润水平，且有超额利润。项目不仅能达到正常利润水平，且有超额利润。项目仅能达到正常利润水平。项目仅能达到正常利润水平。项目不能达到正常利润水平（但并不意味着亏损）项目不能达到正常利润水平（但并不意味着亏损）= B / C= B - C= (B C)/C公式类型单方案经济可行性方案比选结论一致可以
3、结论一致不可以结论一致不可以= B - C= B / C= (B C)/C3. METHODS FOR ECONOMIC ANALYSISIn this Chapter, we will discuss various methods used for evaluating economic feasibility of projects. The foundation for these methods was laid in the previous Chapter when we discussed the importance of time value of money and it
4、s impact on the cash flow. In this Chapter, we will formalize those concepts through various methods and illustrate the applications of these methods by numerous examples.In evaluating projects we will restrict our attention to projects involving mutually exclusive alternatives only. In simple terms
5、, mutually exclusive alternatives are exclusive of each other. By selecting one alternative, we will automatically eliminate the other alternatives. A simple example would be buying a computer for personal use. If one is interested in buying only one computer for personal use, selection of any one c
6、omputer from an array of alternatives will automatically eliminate all the other alternatives. For example, if one decides to use an IBM-compatible PC, then another alternative, Apple computer, would be automatically eliminated.In the petroleum industry, in several instances one will deal with proje
7、cts where only one alternative will have to be selected after evaluating several alternatives. Some examples are:* Selection of a contractor to conduct 3-D seismic survey for an exploration venture.* Selection of a drilling contractor to drill a well.* Selection of a service company to conduct log s
8、urveys.* Selection of a pumping unit to improve the production.* Evaluation of an in-fill drilling option to increase the production.* Selection of a compressor to increase the gas production.In all the above projects, we can select only one of the several alternatives being considered. Once a parti
9、cular alternative is selected, all the other alternatives are automatically eliminated from further consideration.Throughout this Chapter, we will use a minimum rate of return (MROR) to evaluate the attractiveness of various alternatives. The choice of MROR is very critical in evaluating the alterna
10、tives. In simple terms, the MROR is the minimum rate required by a corporation or an individual to make the project attractive. For example, if one borrows the money from a bank at an interest rate of 10% per year to invest in a drilling venture, the MROR is 10%. This is because, if the project does
11、 not yield at least 10% of return on the investment, the person will be a net loser. If the project earns 15% return, then after paying 10% interest to the bank, the person can make some money for himself or herself. If the project only earns 5% return, the person will have to pay from his or her ow
12、n pocket to cover the interest payment to the bank. If the project earns 10% then there is no net gain or loss. Therefore, 10% becomes the minimum acceptable rate.MROR is sometimes also called as the cost of capital. The computation of the cost of capital for the corporation is much more complex tha
13、n the above example because of the varied sources of capital. We will delay the discussion on this subject until a later section of this Chapter. It is suffice to state that any alternative which does not satisfy the minimum rate of return (MROR) criteria will be automatically rejected. Ideally, whe
14、n evaluating mutually exclusive alternatives, we would like to have the economic criterion to possess the following characteristics:* It should be suitable for ranking various alternatives.* It should reflect the cost of the capital.* It should incorporate uncertainties in our assumptions.* It shoul
15、d reflect goals and objectives of the corporation.In practice, no single criterion would be able to satisfy these characteristics. Especially, although techniques are available to quantify the uncertainties in economic evaluation, for simplicity, we will assume that all the information regarding any
16、 given alternative is known with certainty. Regarding the last ideal characteristic of a criterion, we will assume that our goal will always be either to minimize cost or to maximize profit or benefit. We will not consider other objectives in our analysis.Several economic criteria are available to e
17、valuate mutually exclusive alternatives; each criterion having certain advantages and disadvantages. we will discuss techniques which do not account for time value of money. present the present value (PV) analysis. the annual value (AV) analysis. rate of return method (ROR), growth rate of return me
18、thod (GROR), the profit to investment ratio method (PIR). (MROR) In the last section, (MROR).3.1 Methods Without Time Value of MoneyThe methods used without accounting for time value of money are simple to use. These methods do not require significant number of calculations. Although used extensivel
19、y in the absence of calculators and computers, even by big corporations, at present, these methods, at best, provide a rule of thumb solution to a problem. In the alternative, these methods may be considered as primary screening tools to evaluate the alternatives. In the following, we discuss some o
20、f these methods and explain the relative advantages and disadvantages of these methods.3.1.1 Return on Investment (ROI)This is one of the most commonly used methods in the oil industry. It is a ratio of total income during the life of the project divided by the total investment during the same perio
21、d. In mathematical form, we can write,As a rule of thumb, a value of ROI greater than 2 is considered a good investment. Since the method ignores the time value of money, it should only be used in conjunction with other methods which account for the time value of money.Example 3.1 The following cash
22、 flow profile is given for an exploration project. Calculate the return on investment (ROI) for the project. Year 0 1 2 3 4 5 6 7 8 Cash Flow -20 -30 30 50 60 40 40 30 20(1000s of dollars)Solution total cumulative income=30 + 50+ 60 + 40 + 40 + 30+ 20 = 270 total investment = -50Using Eq. 3.l, Using
23、 rule of thumb, since 5.42.0, it is a good investment. Another method, which is also used, is called profit to investment ratio and is defined as, In other words, by simply subtracting one from the ROI, we can calculate the PIR. As a rule of thumb, it is preferred that PIR be greater than 1.0. Eq. 3
24、.2 is slightly different than the PIR method we discuss in Section 3.6. In Section 3.6, we expand this definition to include the effect of time value of money.Example 3.2 The following two alternative projects are considered for a potential investment. Using ROI or PIR as a criterion, which alternat
25、ive will be selected? Year 0 1 2 3 4 5 6 7 8Alternative I -100 -50 -20 100 90 80 70 60 60Alternative II -170 120 100 80 60 50 0 0 0SolutionAlternative I cumulative investment = 100 + 50 + 20 = 170 cumulative income = 100+ 90 + 80 +70+ 60+ 60 = 460Using Eq. 3.l. Using Eq. 3.2, PIR = ROI - 1=1.7 Alter
26、native II cumulative investment = 170 . cumulative income = 120+100 + 80 + 60+ 50 =410Using Eq. 3.l, Using Eq. 3.2, PIR = ROI - l = l.4.Using the rule of thumb criteria, both the alternatives are feasible. Comparing the two alternatives, Alternative I is superior to Alternative II based on both crit
27、eria.3.1.2 Payback PeriodPayback period is one of the simplest techniques used in evaluating the feasibility of a project. It is defined as the time required to receive the initial investment back. In the alternative, it is the time required for the cumulative net cash flow to become positive. It is
28、 a quantitative measure of turn around time after which the capital can be reinvested in other projects. It is a useful technique when the project requires relatively small investment with a quick payback; e.g., well stimulation using acidizing. It is also useful when the investment is at risk due t
29、o political instability, or due to contractual agreement(合合 同同 ) requiring a pull-out after a certain period.Payback period, however, has certain drawbacks. As explained before, it does not account for the time value of money. It also does not account for the profit generated after the payback perio
30、d. As a result, the payback period may not be a valid criterion for projects which require significant lead time and may last over several years. It is not a criterion indicating economic efficiency; i.e., how efficiently the money is invested. Instead, it is a criterion of economic expediency; i.e.
31、, how quickly the capital can be recovered. For a company interested in liquidity of capital, payback period provides a useful tool for knowing how quickly the invested capital is recovered. However, it does not tell us how good the investment is in terms of maximizing the benefit. The following exa
32、mples illustrate the usefulness and drawbacks of a payback period technique. Example 3.3 Based on evaluation of an oil well, it was determined that after acidizing the well, the production of the well will increase from 10 bbl/day to 15 bbl/day. If the price of oil is $20/bbl, and the cost of acidiz
33、ing is $5,000, what is the payback period?SolutionIncremental oil production = 15 - 10 = 5bbl / dayTherefore, $5,000 would be recovered in less than two months, $5,000/$3,000=1.67The payback period would be 1.67 months.Example 3.5 An initiation of a waterflood project will require an initial investm
34、ent of $2 million. It is expected that the project will generate additional revenues of $700,000 in the first year followed by a decline of 10% per year. Calculate the payback period (i) without discounting for the time value of money, and (ii) by discounting for the time value of money. Assume the
35、discount rate to be 8%.SolutionThe following table shows the yearly cash flows and discounted cash flows for this problem. The sample calculations follow. Cash Cumulative Discounted Cumulative Year Flow Cash Flow Cash Flow Discounted Cash Flow 0 -2,000,000 -2,000,000 -2,000,000 -2,000,000 1 700,000
36、-1,300,000 648,148 -1,351,852 2 630,000 -670,000 540,123 -811,728 3 567,000 -103,000 450,103 -361,626 4 510,300 407,300 375,086 13,460 5 459,270 866,570 312,571 326,032Sample CalculationsTo calculate cash flow in year 2, = 700,000 x 0.9 = $630, 000The cash flow in other years are similarly calculate
37、d. For part (i), the cumulative cash flow becomes positive after 3.2 years. Therefore, the payback period is 3.2 years.For discounted payback period, cash flow in each year is discounted by using an interest rate of 8%.For example, in year 1, For year 2.Using the discounted cash flow values, the cum
38、ulative cash flow becomes positive after four years. Therefore, the discounted payback period is four years.Obviously, the discounted payback period is a strong function of the interest rate at which the cash flow is discounted. For the same example, if we use a discount rate of 15%, the discounted
39、payback period is 5.2 years instead of four years.For situations where the cash flow investments and benefits are over a long term, the discounted payback period is a much more realistic measure of investment expediency than a simple payback period method.To summarize, the methods which do not accou
40、nt for time value of money are simple to use and may provide a primary screening tool to evaluate alternatives. However, these methods should only be used in conjunction with other methods to properly evaluate the projects feasibility.3.2 Present Value AnalysisPresent value (or worth) (PV) analysis
41、evaluates projects based on the financial position of various alternatives at the present time. This technique accounts for the time value of money and provides a way of comparing various alternatives at the same frame of reference. If the project has a fixed output, the objective should be to minim
42、ize the present worth of costs. As discussed in Chapter 1, if the project has a fixed input, the objective should be to maximize the present worth of benefits, and if the project has neither fixed input or output, the objective should be to maximize the difference between the present worth of benefi
43、ts and present worth of costs. Let us illustrate these three alternatives through various examples. In these illustrations, we will assume that the lives of the various alternatives are equal.公式推导公式推导0 1 2 3 4 5 n-1 nExample 3.6 A company is considering two alternatives to satisfy its photo copying
44、requirements. The cost of each machine is shown below: (a) (b)Initial Cost $10,000 $8,000Annual Cost $1,000 $1,400The annual cost includes the replacement and maintenance costs. If both machines have a life of five years and the minimum rate of return (MROR) is 10%, which project should be selected?
45、 SolutionBoth alternatives will perform the same functions, i.e. , they offer the same output. Therefore, our objective should be to minimize the cost.For alternative (a), For alternative (b), Comparing the present worth costs of the two alternatives, alternative (b) should be selected.Example 3.7 A
46、 proposal calls for an investment of $100,000 in drilling a new well. It is expected that the production will generate a revenue of $30,000 per year for six years. At the end of six years, the production equipment can be sold for $10,000. Another proposal requires a $100,000 investment. It will gene
47、rate $50,000 in the first year followed by 8% decline in each year. The life of the project will be six years. There is no salvage value associated with the proposal. If the minimum rate of return is 12%, which project should be selected?SolutionWe have a fixed amount of investment. Our objective sh
48、ould be to maximize our output or to maximize the present value of benefits received after the fixed investment.For the first proposal, For the second proposal,Comparing the PVbenefits, for both the proposals, the second proposal should be selected.Example 3.8 A company is considering two alternativ
49、e computer models to satisfy its computer needs. Due to their differing powers, the benefits received by both the computers are different. Based on the work projections, the company thinks that either of the computers can be used to their fullest potential. If the minimum rate of return is 10%, whic
50、h computer should the company select?Alternative Initial Cost Annual benefit Life, Years Salvage Value (a) $4,500 $1,500 5 $600 (b) $3,200 $1,000 5 $300SolutionThe salvage value indicates the price received if the computer is sold after five years. Since neither the costs, nor the benefits are fixed
51、, we need to select an alternative, which maximizes the difference between the benefits and costs. We can define the difference as, (3.3)where NPV is the net present value of the alternativeFor alternative (a), For alternative (b), Based on the comparison of the two alternatives, (a) should be selec
52、ted.NPV的意义的意义 NPV0，项目不仅能达到基准收益率的水平，项目不仅能达到基准收益率的水平,而且有超额利润；而且有超额利润；NPV0，项目仅能达到基准收益率的水平；，项目仅能达到基准收益率的水平；NPV0，项目不仅能达到基准收益率的水平，项目不仅能达到基准收益率的水平加权平均值加权平均值其其中中：1/(1+ic)t 权权重重，越越靠靠近近现现在在的的年年份份，其其NCF对对NPV的的贡贡献献越越大大，否否则则越越小。小。NPV大小与基准点有关。大小与基准点有关。0年和第一年相差年和第一年相差(1+ic)1 优缺点优缺点3.2.2 Bond EvaluationAnother inte
53、resting application of present value analysis is to determine the worth of bonds issued by corporations or governments. A bond is a type of loan where the debtor (债债务务人人) promises to pay a stated(一一定定的的) interest at specified intervals (时时间间间间隔隔)for a definite period and then to repay the principal
54、at the maturity date （到到期期日日）of the bonds.Bonds are issued by corporations and governments to raise money. Individual bonds are issued in even denominations such as $1,000 or multiples of $1,000.The face value of the bond at the time of issuance is called the par value(票票面面价价值值). The bonds are issue
55、d for a fixed period of time, i. e., 5 years, 10 years, etc. After that period, the principal will have to be paid back. During that period, the debtor will periodically pay an interest on the bond. The annual rate at which the interest is paid is called a coupon rate. Although semiannual(每每半半年年的的)
56、payment of interest is the most common, other types of payments are also allowed. The bonds, although issued for a fixed period, can be traded in a financial market at a face value other than the par value. This affects the present value of the bond. For example, a bond purchased at a coupon rate of
57、 10% can be sold at a higher price than the par value in the future if in the future, the interest paid by new bonds is less than 10%. This is because, if someone wants a bond which pays 10% interest rate, they will have to pay a premium price(溢溢价价) to reflect that higher interest rate. The reverse
58、is turn if in the future the new bonds are paying higher interest rates than 10%. Under these conditions, the bond may have to be sold at a discount price compared to the par value. The following examples illustrate the evaluation of bonds more clearly. Example 3.9 A major oil company issued nominal
59、 9% coupon rate bonds in $10,000 denominations payable in 10 years. Interest is paid on a semiannual basis.a. What is the interest earned every 6 months?b. If, after 5 years, the average bond is providing only 6% interest rate, what price can you sell that bond at so that the buyer will receive, eff
60、ectively a 6% interest rate?c. What will be your effective present value of the bond if you sell it at that price?Solutiona. The interest is paid on a semiannual basis. Therefore, the nominal interest rate per six months, Therefore, the interest paid per six months, b. $450 is the semiannual payment
61、 you will be receiving on this bond. This is a periodic payment. In addition, at the end of its life, you will receive the principal back. We could treat it as a salvage value. Schematically, the cash flow profile after 5 years is shown in Fig.3.2. 1 2 10P=?$10,000$450Figure 3.2: Cash Flow Profile f
62、or Example 3.9We need to calculate the present value of this cash flow profile such that the semiannual interest rate of (6/2) 3% is received.This is the price at which you can sell the bond to the buyer.c. If the bond is sold to the buyer at $11,280, the seller buys the bond at $10,000, and the sal
63、vage value of the bond to the seller after 5 years is $ ll,280. The effective interest the seller has earned has to be calculated by trial and error. We can show the cash profiles as (Fig. 3.3),We can write the present value as, if the interest is i ,By trial and error, for i = 5.5%, both sides are
64、equal. Since this is semiannual interest rate, the nominal rate received by the seller is 11% per year. 1 2 10$10,000$11,280$450Figure 3.3: Cash Flow Profile of a seller $450 $450Example 3.10 A bond issued by a company with a par value of $l,000 is currently sold in the market at $939. The coupon on
65、 the bond is 8.5%, interest to be paid semiannually. If you buy the bond on January l, 1993 and the maturity date is October 1,1997, what is the interest rate you will earn on this bond？SolutionInterest paid semiannually, This is the periodic payment. The cash flow profile can be shown as in Fig.3.4
66、. $42.50 $42.50 1 2 Apr-93 Oct-93 Oct-97Jan-93$939$1,000$42.50Figure 3.4: Cash Flow Profile for Example 3.10The first payment will be received in April, 1993. The total number of payments received is 10. Therefore, we can write,Through trial and error, i = 5.4%.Therefore, the nominal interest rate r
67、eceived by you will be 10.8% per year.Note that the last term in the equation represents the fact that only 3 months (instead of six) are elapsed before the first payment is received. Three months is 0.5 period of the semiannual period.3.2.3 Alternative with Unequal LivesIn the examples in the first
68、 section, we considered alternatives with equal lives. In this section, we will extend the analysis for cases where the alternatives have unequal lives. These are the cases one commonly encounters for service contracts where different vendors (卖卖主主)may offer contracts extending over different period
69、s. As an example, as a corporation interested in leasing computers, two vendors may offer contracts over different periods. One may extend it over a three year period, whereas, the other may extend it over a five year period. If we assume that the corporation will require the computers over a much l
70、onger period than either of the two contracts, the questions is how to compare the two contracts. The difficulty being, if we select a three year period contract, we need to account for the remaining two year period which is covered by the alternate contract.The two methods normally used for compari
71、ng such service contracts are: l) either to adjust the salvage value of a longer period alternative to reflect a shortened life, or 2) assume that all the alternatives are repeated a certain number of times such that the cumulative lives of the repeated cycles are the same for all the alternatives.
72、We will discuss both the options below.Adjusting the Salvage ValueThe simplest way to accommodate varying useful lives for different alternatives is to adjust the salvage value of the alternatives. If the goal is to compare various alternatives using the shortest useful life among all the alternativ
73、es, the useful lives of all the other alternatives are reduced to that level and the salvage values are increased to reflect the reduction in the useful lives. The schematic representation of the method is shown in Fig. 3.5. LASALALABSBSBSBSBLA+LA=LBLA=Useful life of alternative A LB=Useful life of
74、alternative BSA=Salvage value of alternative SB=Salvage value of alternative BFigure 3.5: Comparing Alternatives with Unequal LivesLASALALABSBSBSBSBLA+LA=LBLA=Useful life of alternative A LB=Useful life of alternative BSA=Salvage value of alternative A SB=Salvage value of alternative BFigure 3.5: Co
75、mparing Alternatives with Unequal LivesExample 3.11 A company is considering two possible alternatives for needed equipment. The costs involved in both alternatives are given below. If the minimum rate of return is 8%, which alternative should be selected? (A) (B)Initial Cost $10,000$25,000Annual Be
76、nefit $2,800 $7,000Useful Life, Years 5 7Salvage Value $1,000 $2,000SolutionIn the above example, alternatives A and B have different useful lives. Before we can apply the net present value analysis, we need to make the useful lives equal.In this method, we are going to reduce the useful life of pro
77、ject B and adjust the salvage value appropriately. If we assume that by reducing the useful life of project B, the salvage value increases to $5,000, we can apply the NPV analysis to both alternatives, Based on the NPV analysis, B is a better alternative than A.3.3 Annual Value AnalysisThe differenc
78、e between the present value analysis and the annual value (AV) analysis is that in the case of PV analysis we compare the alternatives based on present value, whereas in the case of AV analysis, we compare the alternatives based on the annual value. All the problems which can be solved by AV analysi
79、s can be solved by PV analysis. However, AV analysis does possess certain advantages; the biggest advantage being it is easier to explain to someone not familiar with economic analysis principles than the PV analysis. It may also save calculations required under certain circumstances.Specifically, s
80、ome instances in which AV analysis is useful are:* Financial Reporting: Most of the corporations report to their shareholders the companys performance on an annual basis. It is much easier to present the annual cost or benefit of a project than the net present value.* Cost/Unit Calculation: In compa
81、ring alternatives, it is easier to illustrate the benefit of one method over the other by showing that a particular method costs less to produce one unit than the other.* Alternative with Unequal Lives: When using the method of common multiple while comparing two alternatives with unequal lives, the
82、 calculations are made a lot easier by using AV analysis.Example 3.14 Two alternatives are being considered for leasing a copier machine. The costs associated with both the machines are given below: Which is the better alternative? Assume that the operating costs of making one copy is the same using
83、 both machines. MROR = 10%. Cost Alternative I Alternative IIInstallation $2,000 $1,500Annual $800 $600 in first year, Maintenance increases $200 per yearLife, Years 5 5Salvage Value 0 0SolutionWe can solve this example using the PV analysis. However, it is more convenient to compare the annual cost
84、s associated with each machine. The installation cost or the initial cost is called the capital cost. The annual equivalent of capital cost is called capital recovery cost.* Alternative IUsing the equation,capital recovery cost, total annual cost = 800+527=$1,327* Alternative IIcapital recovery cost
85、=The maintenance cost is increasing at a rate of $200 per year. We can calculate an equivalent constant cost for this arithmetic series,total annual cost = 962+395=$1,357Comparing the two costs, Alternative I should be selected. As can be noticed from this example, it is much easier to understand th
86、e yearly costs to the company by installing the copy machine than simply looking at the present value of costs. If we do calculate the present value, we will get the same answer.* Alternative I* Alternative IISince Alternative I has smaller costs than Alternative II, the first alternative should be
87、selected.Example 3.16 Two alternatives are considered for a given project, A BInitial Cost $10,000 $16,000Annual Cost $5,000 $4,000Life, Years 4 8Salvage Value $2,000 $4,000If the MROR is 10%, which alternative should be selected?SolutionThis is a problem we investigated in the last section using th
88、e PV analysis. When we compare two alternatives with unequal lives, we can assume that the alternatives have equal lives by repeating one or both the alternatives. The method is called a method of a common multiple. If you assume that such method is applicable, the annual value technique is much eas
89、ier to use.In applying the AV technique, we will calculate the annual equivalent cost for both the alternatives using the given conditions. The one with the least cost will be selected.* Alternative ANote that the salvage value is a future recovery. Therefore, the annual equivalent of it is subtract
90、ed from the cost.* Alternative BBy comparing the two alternatives, Alternative B should be selected. We do not need to repeat Alternative A twice in these calculations since the annual cost during the second four years period is going to be the same as the first four year period.The answer obtained can be confirmed by PV analysis. If we assume that Alternative A is repeated twice, we can calculate the present value of costs as follows.Alternative AAlternative BSince the (AV)costs for Alternative B are smaller than Alternative A, Alternative B should be selected.AA
