技术经济学英文版演示文稿C32.ppt

  One major advantage of the GROR calculation is that it eliminates the trial and error procedure required for the conventional ROR analysis. The procedure also eliminates the possibility of multiple RORs for a given cash flow. If there is more than one sign change in the cash flow profile, all positive cash flows are transferred at the end of the useful life by assuming that the positive cash flows are invested at the rate of reinvestment. This step will result in elimination of multiple sign changes and will result in only one sign change.   In applying the growth rate of return (GROR) as a criterion, we need to compare the calculated GROR with the MROR. If GRORMROR, we consider the alternative to be feasible. If GRORMROR, we will reject the alternative. It should be understood that the GROR technique does not eliminate the need for incremental analysis. Like the ROR method, if we are presented with more than one alternative, we need to consider the incremental analysis. Once we calculate GROR, we can compare it with the investment rate (it may be MROR); the rate at which the future benefits are invested. If △GROR is greater than the investment rate, we select the alternative requiring a bigger investment. If the value of △GROR is less than the investment rate, we select the alternative requiring a smaller investment. The following example illustrates the application.   Example 3.29 Assume the same data as given in Example 3.27. If we assume that all the revenues are invested at the same rate as the MROR, which option is preferable? Solution In this example, we are considering two alternatives. One alternative requires no additional drilling; the other alternative requires in-fill drilling. The cash flow profiles are provided for both the alternatives.   For both these cash flow profiles, we can easily show that the GRORMROR. Therefore, both alternatives are feasible alternatives. This brings us to the next step. The cash flow profile for t