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Risk Assessment in Economic Feasibility Analysis: The Case of Ethanol Production in Texas

By James W. Richardson, Brian K. Herbst, Joe L. Outlaw, David P. Anderson, Steven L. Klose and II Robert Chope Gill

Abstract

The objective of this study is to demonstrate the benefits of quantifying the economic viability of a proposed agribusiness under risk relative to a feasibility study which ignores risk. To achieve this objective, the economic viability of a 50 MMGPY ethanol facility in Texas is analyzed over a 10-year period in two ways: with no risk and with historical risk for prices and costs.Risk and Uncertainty,

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