Estimating the Model Parameters
{"Image DocumentName": "Estimating the Model Parameters", "Image ImageDescription": "How to estimate the value of underlying asset V? Transactions in the developed reserves market (USA) v = value of one barrel of developed reserve (stochastic); V = v B where B is the reserve volume (number of barrels); v is ~ proportional to petroleum prices P, that is, v = q P ; For q = 1/3 we have the one-third rule of thumb ; Let us call q = economic quality of the developed reserve. The developed reserve value V is an increasing function of q. Discounted cash flow estimate of V, that is: NPV = V - D \uf0de V = NPV + D. It is possible to work with the entire cash-flows, but we can simplify this job identifying the main sources of value for V. For fiscal regime of concessions the chart NPV x P is a straight line, so that we can assume that V is proportional to P. Let us write the value V = q P B or NPV = q P B - D.", "Image XResolution": "37", "Image YResolution": "37", "Image ResolutionUnit": "Pixels/Centimeter", "Image Software": "SlidePlayer", "Image YCbCrPositioning": "Centered"}