Methodologies and Techniques for Determining the Value of an Aircraft

2020 ◽  
pp. 036119812095841
Author(s):  
Bijan Vasigh ◽  
Farshid Azadian ◽  
Kamran Moghaddam
Keyword(s):  
Cash Flow ◽  
Flow Analysis ◽  
Operating Costs ◽  
Asset Valuation ◽  
Discounted Cash Flow ◽  
Valuation Model ◽  
Exogenous Factors ◽  
New Generation ◽  
Operating Revenue

Aircraft valuation and the estimation of an accurate aircraft price is undoubtedly a challenging task that has significant consequences for airlines. This paper presents an asset valuation model to show how a series of endogenous as well as exogenous factors can influence the value of an aircraft. Specifically, a discounted cash flow methodology is used to forecast the valuation of an old or new generation aircraft. Both total operating revenue and aircraft operating costs are taken into account to devise a reliable pre-tax profit measurement that is used as the basis of the discounted cash flow analysis. A sensitivity analysis based on Monte Carlo simulation is utilized to identify which factors have a more significant influence on the suggested aircraft value. Therefore, it addresses how value fluctuates in response to economic fluctuations. Indeed, the calculated value of an aircraft highly depends on the underlying assumptions used. The calculated value is compared with available data in a case study for verification.

Assessment of irrigation dam using real options and discounted cash flow approaches: a case study in Greece

Water Policy ◽  
2009 ◽  
Vol 11 (4) ◽  
pp. 481-488 ◽  
Author(s):  
Anastasios Michailidis ◽  
Konstadinos Mattas ◽  
Diamantis Karamouzis
Keyword(s):  
Real Options ◽  
Cash Flow ◽  
Flow Analysis ◽  
Discounted Cash Flow ◽  
Northern Greece ◽  
Uncertainty Factors ◽  
The Real ◽  
Discount Cash Flow ◽  
Real Options Approach

This article extends the evaluation techniques of an irrigation dam in northern Greece, called “Petrenia”, by comparing the real options approach along with, a traditional one, the discount cash flow. By introducing first a Monte Carlo simulation, the various uncertainty factors can be simulated and alternative value options can be computed, feeding them later in the real options model. Results from the case study in Greece clearly demonstrate that the irrigation dam can be classified as a profitable investment, by applying traditional discount cash flow analysis, while by applying the real options approach the project cannot be classified as profitable. Taking into consideration the uncertainty factors, the real options approach reveals that the investment could be postponed and decision makers can keep the option of investing open. Sequentially, discount cash flow analysis accompanied by the real options approach facilitates decision making and improves the investment assessment analysis. In this particular project assessment, two uncertainty factors, variation in dam capacity and water price, restrict the profitability of the irrigation dam, according to the results of the real options approach.

Using Monte Carlo Simulation to Improve Ceramic R&D Investment Decisions

2010 ◽  
Vol 105-106 ◽  
pp. 798-801
Author(s):  
Bao Cheng He ◽  
Hong Tao Jiang ◽  
Shu Zhi Yao ◽  
Bao Yuan He
Keyword(s):  
Monte Carlo Simulation ◽  
Monte Carlo ◽  
Real Options ◽  
Cash Flow ◽  
Investment Decisions ◽  
Discounted Cash Flow ◽  
Valuation Model ◽  
Managerial Flexibility ◽  
D Investment

The success of ceramic companies is highly dependent on research and development (R&D). Thus, a pivotal aim of management is to allocate resources to the best scientific and financial R&D projects. But the valuation of ceramic R&D is a difficult task for managers. The conventional discounted cash flow (DCF) methods fail to consider the value of managerial flexibility provided by R&D projects. Real options Analysis (ROA) offers a superior way of capturing the value of flexibility. It enables decision-maker to value projects more accurately by incorporating managerial flexibilities into the valuation model. However, ROA can’t effectively deal with the volatility of parameters in itself under high uncertain circumstance. In view of the limitation of ROA, this paper uses Monte Carlo simulation to solve the parameters volatility problems. In the end, the case study proves that Monte Carlo simulation can improve R&D investment decisions, especially for highly unpredictable ceramic R&D projects.

Manufacturer's pricing and lot-sizing decisions for perishable goods under various payment terms by a discounted cash flow analysis

2019 ◽  
Vol 218 ◽  
pp. 83-95 ◽  
Author(s):  
Chun-Tao Chang ◽  
Liang-Yuh Ouyang ◽  
Jinn-Tsair Teng ◽  
Kuei-Kuei Lai ◽  
Leopoldo Eduardo Cárdenas-Barrón
Keyword(s):  
Cash Flow ◽  
Lot Sizing ◽  
Flow Analysis ◽  
Discounted Cash Flow ◽  
Perishable Goods

Measuring Wildfire Impacts: Method and Case Study

1987 ◽  
Vol 11 (3) ◽  
pp. 143-147
Author(s):  
W. L. Mills ◽  
S. D. Shnitzler ◽  
R. S. Meldahl
Keyword(s):  
Economic Impact ◽  
Cash Flow ◽  
Flow Model ◽  
Growth And Yield ◽  
Timber Production ◽  
Discounted Cash Flow ◽  
The Impact ◽  
Data Requirements

Abstract A discounted cash flow model called the Impact Appraisal Model (IAM) computes the economic impact due to a change in timber production caused by a wildfire. Data requirements for the IAM can be obtained using standard inventory procedures to estimate the pre- and post-fire stand conditionsneeded to initiate a growth and yield simulator. The model is demonstrated using five loblolly plantations that burned in 1980 and 1981. South. J. Appl. For. 11(3):143-147.

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