Abstract
Coal resources development projects have many characteristics of large investment, irreversibility, long cycle and uncertainty and so on, due to the inherent defects of the traditional NPV method, which can’t effectively deal with the uncertainty faced by the coal resources development investment, thus, the real value of the coal development investment projects are hardly assessed scientifically and rationally. Using the real options method, the paper builds a evaluation model on coal resources development investment project. The results show that using the model to assess the project value of coal resources development investment will be more scientific and rational, parameter analysis leads to the result that interest rates and convenience yields have a negative effect on the critical investment value of the projects, and the high jump frequency will reduce the critical investment value of the projects, while positive changes on jump range can increase.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
References
Abdel Sabour SA (2001) Dynamics of threshold prices for optimal switches: the case of mining [J]. Resour Policy 27(3):209–214
Amrma M, Kulatilaka N (1998) Real options: managing strategic investment in an uncertain world [M]. Harvard Business School Press, Boston, pp 87–98
Brennan M, Schwrts ES (1985) Evaluation natural investments [J]. J Bus 57:135–157
Copeland T, Antikarov V (2001) Real options [M]. Texere, New York, pp 121–136
Dixit A, Pindyck RS (1994) Investment under uncertainty [M]. Princeton University Press, Princeton, pp 56–65
Frimpong S, Whiting JM (1997) Derivative mine valuation: strategic investment decisions in competitive markets [J]. Resour Policy 23(4):163–171
Jin-suo Zhang (2002) Study on evaluation methods of mineral resources assets [D]. Xi’an Jiaotong University, Xi’an, pp 36–56 (In Chinese)
Jin-suo Zhang, Shao-hui Zou (2006) Study on mechanism of coal mining option [J]. J Xi’an Univ Sci Technol 26(1):121–124 (In Chinese)
Jin-suo Zhang, Shao-hui Zou (2009) Study on methods of the coal resources investment decision based on real option [J]. China Min Mag 18(9):21–26 (In Chinese)
Jin-suo Zhang, Shao-hui Zou, Tao Wang (2012) An investment decision model for coal resource development based on multiple real option. J Xi’an Univ Sci Technol 32(1):19–24 (In Chinese)
Lei Zhu, Fan, Yi-ming Wei (2009) An optimal investment model for mineral resources based on real option theory [J]. Chin J Manag Sci 17(2):36–41 (In Chinese)
Myers SC (1977) Determinants of corporate borrowing [J]. J Financ Econ 5:147–175
Neng-fu Zhang, Si-jing Cai, Chao-ma Liu (2002) Application of option pricing theory to decision-making on mining projects [J]. J Univ SciTechnol Beijing 24(1):5–7 (In Chinese)
Neng-fu Zhang, Si-jing Cai, Chao-ma Liu (2003) Real option evaluation method of investment value of mining projects. J China Univ Min Technol 32(4):455–458 (In Chinese)
Paddock J, Siegel D, Smith J (1988) Options valuation of claims on physical assets: the case of offshore petroleum lease [J]. Q J Econ 103(3):479–508
Pindyck RS (1999) The long-run evolution of energy prices [J]. Energy J 20(2):1–27
Saito R, de Castro GN, Mezzomo C, Schiozer DJ (2001) Value assessment for reservoir recovery optimization [J]. J Pet Sci Eng 32:151–158
Slade M (2001) Valuing managerial flexibility: an application of real-option theory to mining investments [J]. J Environ Econ Manag 40:193–233
Tao Wang, Jin-suo Zhang, Shao-hui Zou (2012) An evaluation model for coal mining exploration and investment projects based on real option. J Xi’an Univ Sci Technol 32(1):13–18 (In Chinese)
Trigeorgis L (1996) Real options: management flexibility and strategy in resource allocation [M]. MIT Press, Cambridge, pp 98–102
Yong-feng Zhang et al (2006) Study on strategic economic evaluation of oil & gas exploration projects based on compound real options [J]. Nation Gas Ind 26(3):138–141 (In Chinese)
Acknowledgment
This work was financially supported by the National Natural Science Foundation of China (No. 70873094).
Author information
Authors and Affiliations
Corresponding author
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2013 Springer-Verlag Berlin Heidelberg
About this paper
Cite this paper
Wang, T., Zhang, Js., Zou, Sh. (2013). Based on the Jump-Diffusion Process of the Coal Resources Development Investment Project Evaluation Model. In: Dou, R. (eds) Proceedings of 2012 3rd International Asia Conference on Industrial Engineering and Management Innovation (IEMI2012). Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-33012-4_60
Download citation
DOI: https://doi.org/10.1007/978-3-642-33012-4_60
Published:
Publisher Name: Springer, Berlin, Heidelberg
Print ISBN: 978-3-642-33011-7
Online ISBN: 978-3-642-33012-4
eBook Packages: Business and EconomicsBusiness and Management (R0)