Real Option Models Sample Clauses

Real Option Models. The real options have eight most indigenous to the petroleum sector, including the options to defer, default, expand, contract, shut down and restart, abandon for salvage value, switch use and corporate growth options. Xxxxxxx and Xxxxxxxxxx (2000) give an example about flexible management in a large company by using real option analysis. We assume that the company has one-year license to extract oil and refinery operation. The expense include I1, I2, I3, IC, IE in a year (T1=1). Figure 2.9 presents the critical options in the project which is based on Xxxxxxx and Trigeorgis (2000) pg.9-14. Operating stage (cash inflows) Building stage 0 3 5 6 7 T=15 IC I1 Defer (up to T1 years) IE I3 Expand (by x=50%) Contract (by c=25%, save IC) I2 Abandon (forgo I2) Figure 2.9: “a generic project requiring a series of outlays (vertical arrows, I’s), allowing management the flexibility (collection of real options) to defer, to abandon, to contract or expand investment, and to switch use.” (Xxxxxxx and Trigeorgis, 2000) T1=1 Suppose the oil company has a one-year lease to start drilling on undeveloped land with potential oil reserves for up to a year I1= Certain Exploration Costs I2= Expense for the construction of a new processing facility I3= Last expense IC= saving a portion (c %) of I3 if market is weak IE= the rate of production increase x % if the oil price is higher than expected Subsequently, in terms of Xxxxxxx and Xxxxxxxxxx (2000) and the table 2.1 common real options in pp.3, the identification of real options is presented. The following table may describe all the types of real options briefly and the details would be analyzed subsequently. Table 2.1: Types of Real Options ( Xxxxx Xxxxxxxxxx, 1993) Category Description Important in Option to defer Management holds a lease on (or an option to buy) valuable land or resources. The management can wait (x years) to see if output prices justify constructing a building or plant All natural resource extraction industries, real estate development, farming industry and paper manufacturing industry. Option to default A generic project with a series of outlays which consists of building stage and operating stage. Each stage could be considered as an option on the value of subsequent stages. In addition, these options could also be valued as a compound option. All R&D intensive industries, especially in medicine industry and long-term development projects(e.g., large-scale construction projects ) Scaling Option (e.g., to e...
Sample 1
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Related to Real Option Models

  • Additional Options The NYS Contract Price for Additional Options offered under the Contract in accordance with Section III.2.7 Additional Options, shall be the Additional Options NYS Discount listed on the Contract Pricelist, or higher, applied to the MSRP on the current OEM Data Book or Contractor-Published Pricelist, as applicable. See Section III.1.2

  • Data for Option W1 W1.1 The Adjudicator the person selected from the ICE-SA Division (or its successor body) of the South African Institution of Civil Engineering Panel of Adjudicators by the Party intending to refer a dispute to him. (see xxx.

  • Renewal Options The State requires two (2) five (5) year options to renew with thirty (30) days advance written notice to the Landlord to exercise such option based on the terms and conditions defined in the Initial Lease. Please outline the rental rate for said option periods.

  • Access Options You may withdraw or transfer funds from your account(s) in any manner we permit (e.g., at an automated teller machine, in person, by mail, Internet access, automatic transfer, or telephone, as applicable). We may return as unpaid any check or draft drawn on a form we do not provide, and you are responsible for any loss we incur handling such a check or draft. We have the right to review and approve any form of power of attorney and may restrict account withdrawals or transfers. We may refuse to honor a power of attorney if our refusal is conducted in accordance with applicable state law.

  • Our Option If we give you written notice within 30 days after we receive your signed, sworn proof of loss, we may repair or replace any part of the damaged property with material or property of like kind and quality.

  • Standard Option The Connecting Transmission Owner shall design, procure, and construct the Connecting Transmission Owner’s Attachment Facilities and System Upgrade Facilities and System Deliverability Upgrades, using Reasonable Efforts to complete the Connecting Transmission Owner’s Attachment Facilities and System Upgrade Facilities and System Deliverability Upgrades by the dates set forth in Appendix B hereto. The Connecting Transmission Owner shall not be required to undertake any action which is inconsistent with its standard safety practices, its material and equipment specifications, its design criteria and construction procedures, its labor agreements, and Applicable Laws and Regulations. In the event the Connecting Transmission Owner reasonably expects that it will not be able to complete the Connecting Transmission Owner’s Attachment Facilities and System Upgrade Facilities and System Deliverability Upgrades by the specified dates, the Connecting Transmission Owner shall promptly provide written notice to the Developer and NYISO, and shall undertake Reasonable Efforts to meet the earliest dates thereafter.

  • Option Two In the event that the complainant is not be satisfied with the outcome, he/she may submit a formal complaint in writing. As an alternative to the Option One informal complaint, the complainant may opt to go directly to the formal second stage. The formal written complaint must be received by the Registrar within 10 business days of the complainant receiving feedback. The formal complaint will be reviewed and addressed within three (3) business days and a response will be provided to the complainant within five (5)

  • Option B For the first 4 weeks of leave, the University will pay 100% of regular salary.

  • Renewal Option This Contract may be renewed under the same terms and conditions, subject to the approval of the Commissioner of the Department of Administration and the State Budget Director in compliance with IC § 5-22-17-4. The term of the renewed contract may not be longer than the term of the original Contract.

  • Exercise of Option The Over-allotment Option granted pursuant to Section 1.2.1 hereof may be exercised by the Representative as to all (at any time) or any part (from time to time) of the Option Units within 45 days after the effective date (“Effective Date”) of the Registration Statement (as defined in Section 2.1.1 hereof). The Underwriters will not be under any obligation to purchase any Option Units prior to the exercise of the Over-allotment Option. The Over-allotment Option granted hereby may be exercised by the giving of oral notice to the Company by the Representative, which must be confirmed in accordance with Section 10.1 herein setting forth the number of Option Units to be purchased and the date and time for delivery of and payment for the Option Units (the “Option Closing Date”), which will not be later than five (5) full Business Days after the date of the notice or such other time and in such other manner as shall be agreed upon by the Company and the Representative, at the offices of EG&S or at such other place (including remotely by facsimile or other electronic transmission) as shall be agreed upon by the Company and the Representative. If such delivery and payment for the Option Units does not occur on the Closing Date, the Option Closing Date will be as set forth in the notice. Upon exercise of the Over-allotment Option, the Company will become obligated to convey to the Underwriters, and, subject to the terms and conditions set forth herein, the Underwriters will become obligated to purchase, the number of Option Units specified in such notice.

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