While I could lose on this particular investment, if I made this investment several times, I would come out ahead with a 146.5% payoff.
It should be noted that a key step in this process is to evaluate the quality of the estimates. The expected value of future cash flows is only as valuable at the information that goes into deriving them. It is a situation of garbage in, garbage out. In this case, the different weightings came from one analyst, who based his decisions on OPEC's informational output. OPEC may have been attempting to obfuscate its future policy direction in order to ward off oil speculators, or the analyst may have misinterpreted OPEC's communiques. In either case, it would have been advisable to gather information from more analysts before making the weightings.
There are also capital budgeting techniques that could be applied in this scenario. For example, if the...
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