The valuation of natural resources: a reply

Article Abstract:

Results of an alternative regression specification to test the Hotelling Valuation Principle were found to be inconsistent with the principle, since the intercept term in the log-linear regression is significantly different from the value of zero expected under an assumption of constant returns to scale. A reassessment of the original data set and an estimation of the linear equation, however, showed results consistent with the expectations of a slope coefficient that is close to one and an intercept term not significantly different from zero.

Natural resources

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The valuation of natural resources: a comment

Article Abstract:

An alternative regression specification was used to test the Hotelling Valuation Principle proposed by M.H. Miller and C.W. Upton. While the study contributed to the literature with its investigation of petroleum stocks that are relatively free of non-reserve assets, its results are inconsistent with the Hotelling Valuation Principle. The inconsistency may be traced to the omission of a significant explanatory variable by current theory.

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Capital budgeting, debt management and the APV criterion

Article Abstract:

The adjusted present value (APV) methodology was used in developing simple project valuation procedures. Findings showed that APV capital budgeting criterion was better than net present value based on weighted average cost of capital and remained reliable despite complex computations. The criterion is unlikely to generate significant valuation errors in relation to assumed debt management policy.

Management, Debt financing (Corporations), Debt financing, Capital budgets

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