Technical Report

 

Producing OSB using red alder : a feasibility case study Público Deposited

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https://ir.library.oregonstate.edu/concern/technical_reports/df65vd53f

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  • The objective of this monograph is to illustrate how the elements of an investment analysis are brought together to form a basis for sound decisions on new plant investments. These elements include financial analysis, raw material analysis, and market analysis. The financial analysis consists of determining the initial investment required for the plant, the initial working capital required, the investment tax credits available, the length of the investment period, the state and federal tax rates, the cost of capital, and the annual cash flows associated with the new plant. Using these figures, the net present value (NPV) and internal rate of return (IRR) of the proposed invest­ment are calculated. The raw material analysis consists of determining the requirements, availability, and cost of raw materials and energy necessary to operate a new plant. The market analysis consists of determining the size and availability of markets for the product(s) produced by the plant, the channels of distribution, and the selling price of the products(s). There are basically three steps involved in the evaluation of any investment opportunity. These are: estimate cash flows, calculate the figure of merit, and compare the figure of merit to a chosen criterion. The last two steps are relatively easy since they simply consist of performing calculations and comparisons. The first step is the most difficult because it involves estimating cash flows which are uncertain and not easily quantified. Typically, methods such as the payback period, net present value, and the internal rate of return are used to evaluate the merit of an investment. But these methods fail to assess the risks associated with uncertain cash flows. Because most of the input values required to analyze an investment opportunity have a great deal of uncertainty associated with them, a more accurate picture of the true merit of an investment could be obtained by utilizing an analytical method that incorporates risk. A probabilistic model using Monte Carlo simulation fits this requirement. This monograph demonstrates the use of such a model through a case study of the economic feasibility of locating an Oriented Strand Board (OSB) plant in Western Oregon.
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  • File scanned at 300 ppi (Monochrome) using ScandAll PRO 1.8.1 on a Fi-6770A in PDF format. CVista PdfCompressor 4.0 was used for pdf compression and textual OCR.
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