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Published in:
2011 | OriginalPaper | Chapter
Mean-variance valuation approach for power plants
Author : Sebastian Rothe
Published in: Portfolio Analysis of Power Plant Technologies
Publisher: Springer Fachmedien Wiesbaden
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This chapter introduces a theoretical framework to analyze the issues targeted by the thesis. Therefore, first the traditional discounted free cash flow (DCF) valuation methodology is presented including a breakdown of the most relevant input parameters. Secondly, we demonstrate how computer simulation experiments are able to take various risk factors into account in order to gain a range of the expected DCF asset value. Thirdly, we introduce the portfolio theory of Markowitz (1952) to identify assets which lead to efficient generation portfolios.