Discounted cash flow and modern asset pricing methods : project selection and policy implications

dc.contributor.author	Emhjellen, Magne
dc.contributor.author	Alaouze, Chris M.
dc.date.accessioned	2006-07-18T16:03:28Z
dc.date.available	2006-07-18T16:03:28Z
dc.date.issued	2002-06
dc.identifier.issn	1503-2140
dc.identifier.uri	http://hdl.handle.net/11250/165814
dc.description.abstract	We examine the differences in the net present values (NPV's) of North Sea oil projects obtained using the Weighted Average Cost of Capital (WACC) and a Modern Asset Pricing (MAP) method which involves the separate discounting of project cashflow components. NPV differences of more than $10m were found for some oil projects. Thus, the choice of valuation method will affect the development decisions of oil companies. The results of the MAP method are very sensitive to the choice of parameter values for the stochastic process used to model oil prices. Further research is recommended before the MAP method is used as the sole valuation model.	en
dc.format.extent	85746 bytes
dc.format.mimetype	application/pdf
dc.language.iso	eng	en
dc.publisher	SNF	en
dc.relation.ispartofseries	Working Paper	en
dc.relation.ispartofseries	2002:35	en
dc.subject	discounting	en
dc.subject	CAPM	en
dc.subject	asset pricing	en
dc.subject	oil	en
dc.title	Discounted cash flow and modern asset pricing methods : project selection and policy implications	en
dc.type	Working paper	en