| Summary: | 碩士 === 長庚大學 === 管理學院碩士學位學程在職專班財務金融組 === 101 === The main purpose of this study is to find reasonable evaluation of the coal investing joint venture under the project name MPL of a Taiwanese Company A and an Australian Company B. Comparisons between the original evaluation used by Company A and the alternative evaluation proposed by this paper on the project will be further elaborated.
The Payback method that had been applied by Company A estimated a payback period of 12.25 years and an internal rate of return (IRR) of 7.72%. Such method neglected the time value of currency. By applying the Net Present Value (NPV) and Capital Asset Pricing Model (CAPM) proposed by this paper, such time value can be taken into account. We receive a NPV of 93.1 million in AUD dollars and payback period of 16.5 years for the Project MPL.The payback period is 4.25 years longer than the Company A had calculated. Another focus of this paper is to calculate the value of the additional dig out right that could be carried out when the original one was due. Such value evaluated by the binominal real option method received a NPV of 40.8 million in AUD dollars. Hence, if the dig out right was exercised, the total value of Project MPL would reach a 133.9 million in AUD dollars and an internal rate of return of 8.52%, which would be 0.8% higher than Company A had estimated. Accordingly, we can make the correct decision for the project by mean of the analysis.
We also use the sensitive analysis to clarify the relation between the value of Project MPL with the volatility of change in coal price and the risk-free rate. Positive relations exist for both the volatility of change in coal price and the risk-free rate with the real option value of the additional dig out right.
Despite the thorough evaluation this study had proposed, future on proposals can still make reasonable assumptions on the exactness of influential variables to enhance the exactness, reference and appliance of their studies.
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