The choice the BurMills textile company will make regarding whether to transform from creating their own steam to outsourcing their steam creation to Intrinergy is described by the An instance. BurMills can compute the present value of cost flow for three options: generating their own steam from burning natural gas, outsourcing with any fixed price contract, or with a price agreement that floats with the natural gas price at Henry Hub to Intrinergy. By providing the possibility of revenue from carbon credits in addition to the normal costs related to steam generation the case adds depth.
A suitable evaluation will include a Monte Carlo model -reverting arithmetic random walk for Henry Hub natural gas spot prices, and other distributions. (A pupil spreadsheet is available to accompany this case.)
PUBLICATION DATE: January 14, 2010 PRODUCT #: UV4312-HCB-ENG
This is just an excerpt. This case is about FINANCE & ACCOUNTING
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