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Corn-Ethanol Plant Investment: A Real Options Case Study

Author

Listed:
  • William G. Secor
  • Michael A. Boland

Abstract

The objective of this article is to describe an investment decision using net present value and real options. A case study describes the data and the corn-ethanol industry so students can study a cooperative’s decision of whether or not to invest in a new corn-ethanol plant in 2015 Nebraska. An extensive set of information accompanies this case, including spreadsheets with data, computer software code, lesson plans for teaching real options and net present value, and an extensive teaching note.

Suggested Citation

  • William G. Secor & Michael A. Boland, 2017. "Corn-Ethanol Plant Investment: A Real Options Case Study," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 99(2), pages 524-531.
    • Handle: RePEc:oup:ajagec:v:99:y:2017:i:2:p:524-531.
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    File URL: http://hdl.handle.net/10.1093/ajae/aaw102
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    More about this item

    Keywords

    Agribusiness; agricultural finance; cooperatives; corn; ethanol; net present value; real options;
    All these keywords.

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • D92 - Microeconomics - - Micro-Based Behavioral Economics - - - Intertemporal Firm Choice, Investment, Capacity, and Financing
    • L66 - Industrial Organization - - Industry Studies: Manufacturing - - - Food; Beverages; Cosmetics; Tobacco
    • Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness
    • Q14 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Finance
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources

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