Abstract
This paper uses a real options approach to present a method for evaluating the first Nuclear Power Plant (NPP) investment in Tunisia in 2020. The evaluating model integrates the value of real options: option to wait in the standard discount cash flow analysis. According to the IAEA (2007), starting the first stage of a nuclear power programme makes it possible to construct the first NPP in second time. This study considers that the economic worth of the NPP investment depends on the production cost of the natural gas power plant. This study assumes that the profit realised by the NPP project, defined as the difference between natural gas and nuclear production costs, represented the cash flow of the NPP investment. However, the value of this cash flow is uncertain. This is an investment choice problem under uncertainty. The analysis proposes the optimal investment strategy in NPP project for the Tunisian government. Furthermore, the threshold value of investment cash flow defining the timing of starting NPP construction is calculated. [Received: July 10, 2008; Accepted: November 23, 2008]
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
More From: International Journal of Oil, Gas and Coal Technology
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.