234 Energy Project Financing: Resources and Strategies for Success
Figure A-8. Two investments evaluated using payback periodis a significant issue, then the analysis is stochastic and the assumptions
of certainty are relaxed using probability distributions and statistical tech-
niques to conduct the analysis. The remainder of this section deals with
deterministic economic analysis, so the assumption of certainty will be
assumed to hold. Stochastic techniques are introduced in Section A.9.5.A.8.2 Deterministic Unconstrained Analysis
Deterministic economic analysis can be further classified into uncon-
strained deterministic analysis and constrained deterministic analysis.
Under unconstrained analysis, all projects within the set available are as-
sumed to be independent. The practical implication of this independence
assumption is that an accept/reject decision can be made on each project
without regard to the decisions made on other projects. In general this
requires that (1) there are sufficient funds available to undertake all pro-