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dc.contributor.authorFewell, Jason Edward
dc.description.abstractNew federal legislation proposes to reduce greenhouse gas (GHG) emissions associated with biofuel production. To comply, existing corn ethanol plants will have to invest in new more carbon efficient production technology such as dry fractionation. However, this will be challenging for the industry given the present financial environment of surplus production, recent profit declines, numerous bankruptcies, and lender imposed covenants. This study examines a dry-mill ethanol firm's ability to invest in dry fractionation technology in the face of declining profitability and stringent lender cash flow repayment constraints. Firm level risk aversion also is considered when determining a firm's willingness to invest in dry fractionation technology. A Monte Carlo simulation model is constructed to estimate firm profits, cash flows, and changes in equity following new investment in fractionation to determine an optimal investment strategy. The addition of a lender-imposed sweep, whereby a percentage of free cash flow is used to pay off extra debt in high profit years, reduces the firm's ability to build equity and increases bankruptcy risk under investment. However, the sweep increases long-run equity because total financing costs are reduced with accelerated debt repayment. This thesis shows that while ethanol firm profits are uncertain, the lender's imposition of a sweep combined with increased profit from dry fractionation technology help the firm increase long-run financial resiliency.en_US
dc.publisherNorth Dakota State Universityen_US
dc.rightsNDSU policy 190.6.2
dc.titleThe Effect of Lender-Imposed Sweeps on an Ethanol Firm's Ability to Invest in New Technologyen_US
dc.typeThesisen_US
dc.date.accessioned2019-04-22T20:07:56Z
dc.date.available2019-04-22T20:07:56Z
dc.date.issued2009en_US
dc.identifier.urihttps://hdl.handle.net/10365/29634
dc.subject.lcshEthanol fuel industry -- Finance.en_US
dc.subject.lcshEthanol fuel industry -- Economic aspects.en_US
dc.subject.lcshBiomass energy industries -- Finance.en_US
dc.subject.lcshBiomass energy industries -- Economic aspects.en_US
dc.subject.lcshSeparation (Technology) -- Economic aspects.en_US
dc.subject.lcshGreen technology -- Economic aspects.en_US
dc.rights.urihttps://www.ndsu.edu/fileadmin/policy/190.pdf
ndsu.degreeMaster of Science (MS)en_US
ndsu.collegeAgriculture, Food Systems and Natural Resourcesen_US
ndsu.departmentAgribusiness and Applied Economicsen_US
ndsu.programAgribusiness and Applied Economicsen_US
ndsu.advisorGustafson, Cole R.


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