scholarly journals Ordered Fuzzy Numbers Approach to an Investment Project Evaluation

2013 ◽  
Vol 4 (2) ◽  
pp. 50-62 ◽  
Author(s):  
W. Konrad Kosiński ◽  
Witold Kosiński ◽  
Kacper Kościeński
Keyword(s):  
Net Present Value ◽  
Fuzzy Numbers ◽  
Probabilistic Approach ◽  
Investment Project ◽  
Order Relation ◽  
Project Evaluation ◽  
Investment Projects ◽  
Decision Supporting ◽  
Decision Supporting System

Abstract Aim of the paper is to propose a new tool for a decision supporting system concerning the financial project evaluation. It is based on the determination of the internal rate of return (IRR) of a investment project in which all expenditure and anticipated incomes are vague, and described by Ordered Fuzzy Numbers (OFNs). It means that the probabilistic approach is neglected in this paper and the use of the well developed arithmetics of OFNs is made to find a positive fuzzy root of a fuzzy polynomial representing the fuzzy net present value of the project. Since in the space of OFNs a partial order relation is defined together with a number of defuzzification functionals, the authors can construct a decision support system for investors helping them in acceptance procedure of most profitable investment projects.

New Construction Methodology - A Strategic Approach of Financial and Market Feasibility for Geothermal Cogeneration Plant

2014 ◽  
Vol 984-985 ◽  
pp. 774-783
Author(s):  
Prakash Arul Jose ◽  
Rajesh Prasanna ◽  
Fleming Prakash
Keyword(s):  
Sensitivity Analysis ◽  
Net Present Value ◽  
Financial Analysis ◽  
Investment Project ◽  
Rate Of Return ◽  
Internal Rate Of Return ◽  
Cogeneration Plant ◽  
Investment Projects ◽  
Internal Rate ◽  
Financial Feasibility

Abstract-While constructing the geothermal cogeneration plant the success of the projects depends upon its financial and market feasibility. A new optimization method is used to estimate financing requirements of investment projects will be presented, as well as a new method to predict the optimal year to sell the investment. A case study is used to illustrate the use of a model to assess the financial feasibility of a geothermal cogeneration plant. The conclusion is that Net Present value , Internal rate of Return and Modified Internal rate of Return should be used to assess financial feasibility of investment projects. In addition to calculating the financial feasibility criteria, assessment models should allow the user to perform sensitivity analysis, scenario analysis, and simulation to analyze risk associated with the investment project. Risk probability matrix is used to obtain the risk priority , which then continued with financial analysis for the feasibility study and also sensitivity analysis. The study shows that the parameter investment value will be increased when treatment is done on risk.Keywords:Financial and market feasibility, Geo thermal cogeneration plant, Environmental Aspects, Sensitivity analysis.

scholarly journals RANKING EFFICIENCY OF RURAL PROPERTY INVESTMENT PROJECTS USING MULTICRITERIA DECISION METHODS/DAUGIAKRITERINIS KAIMO STATINIŲ INVESTICINIŲ PROJEKTŲ, EFEKTYVUMO VERTINIMAS

2001 ◽  
Vol 7 (3) ◽  
pp. 238-246 ◽  
Author(s):  
Sigitas Lunkevičius ◽  
Leonas Ustinovičius ◽  
Edmundas Kazimieras Zavadskas
Keyword(s):  
Net Present Value ◽  
Economic Effect ◽  
Investment Project ◽  
Fish Products ◽  
Investment Projects ◽  
Partial Ranking ◽  
Key Indicator ◽  
Ranking Criteria ◽  
Decision Methods ◽  
Calculation Results

Many researchers are right considering economic effect of investments as the key indicator, however, ranking other social, ecological and technical indicators of efficiency separately and leaving them outside of investment ranking criteria system. The authors suggest using together all known efficiency criteria plus some specific of rural property: Payback period, Net present value, Internal rate of return, Profitability index, Business perspective, Rural property purchase price, Rural property reconstruction price, Number of workspace, Taxes, Social level of villagers, Fascination of village. Ranking rural property investment project does not mean deciding which criterion is preferred to another one. Therefore in this situation we use ELECTRE IV approach, because it's objective is to rank the options, but without any weighting criteria. The authors have made some alternatives of rural property revival: Heating and airing systems factory, Fish products manufacture, Woodworker manufacture. On the basis of calculation results the following partial ranking of the alternative projects is suggested: Fish products manufacture; Heating and airing systems factory; 3. Rural property; 4. Woodworker manufacture; 5. Sport and leisure centre.

RISK - MANAGEMENT OF INVESTMENT PROJECTS USING QUALIMETRIC ANALYSIS

ASJ. ◽  
2021 ◽  
Vol 1 (46) ◽  
pp. 64-67
Author(s):  
М. Tashbaev ◽  
B. Abdullaeva ◽  
А. Beisenov
Keyword(s):  
Risk Management ◽  
Financial Stability ◽  
Investment Project ◽  
Financial Risks ◽  
Investment Projects ◽  
Depth Analysis

This article discusses an in-depth analysis of the financial risks of investment projects based on the assessment of financial stability indicators, and the determination of the company's solvency class. This analysis allows you to determine whether an enterprise presenting an investment project on the market is capable of paying off its obligations and minimizing the investor's risks

scholarly journals EVALUATION OF INVESTMENT PROJECTS IN CASE OF CONFLICT BETWEEN THE INTERNAL RATE OF RETURN AND THE NET PRESENT VALUE METHODS

Ekonomika ◽  
2010 ◽  
Vol 89 (4) ◽  
pp. 116-130 ◽  
Author(s):  
Jonas Mackevičius ◽  
Vladislav Tomaševič
Keyword(s):  
Net Present Value ◽  
Investment Project ◽  
Expected Profit ◽  
Rate Of Return ◽  
Internal Rate Of Return ◽  
Present Value ◽  
Investment Projects ◽  
Internal Rate

Results obtained by employing the net present value (NPV) and the internal rate of return (IRR) methods allow to objectively determine the effectiveness and attractiveness of an investment project and to compare investment projects differing in scope, length or the amount of expected profit. While results obtained by the NPV and IRR methods normally correlate, contradictions are possible in individual cases. Such contradictions are called ‘conflict between the IRR and NPV methods’. The paper deals with the main characteristics of NPV and IRR, analysing the substance of the conflict and cases of its manifestation. A technique for the resolution of the NPV and IRR conflict is proposed.

Real Options Models for Maintenance Decision Making for Offshore Jacket Platforms

2005 ◽  
Author(s):  
Sandra Santa-Cruz ◽  
Ernesto Heredia-Zavoni
Keyword(s):  
Decision Making ◽  
Real Options ◽  
Structural Reliability ◽  
Net Present Value ◽  
Investment Project ◽  
Cash Flows ◽  
Point Of View ◽  
Investment Projects ◽  
Financial Variables ◽  
Financial Options

Real options models are currently available as one of the best tools for the assessment of investment projects. This is so mainly due to the capability of the real options models to: (1) account for uncertainties in financial variables that are crucial to the investment project; and (2) quantify the value of the possibility to make a decision on whether to defer, abandon, expand or reduce the project at one or several points along time. Recently, some researchers have proposed the use of real options models for the assessment of infrastructure projects for hydrocarbon exploitation from an economics point of view. The objective of this work is to develop real options models for decision making regarding inspection, maintenance and decommissioning of offshore facilities taking into account the financial and technical aspects of the project. In all cases it is considered that at some point in the future, within the service lifetime of the structure, the decision maker will have an option to carry or not an inspection, and take or not a maintenance or decommissioning action, which will determine the structural and financial performance of the project for its remaining lifetime. The in-service times with no structural failure and the rehabilitation times are modeled as random variables. The cash flows are modeled as stochastic processes considering interruption of operation due to repairs after failure. Analytical expressions are derived for the computation of structural reliability and availability depending upon maintenance actions. An example is given for a jacket platform subjected to fatigue deterioration and damage. Simple and compound options of maintenance and decommissioning options are analyzed. The value of the project is computed by means of an approach similar to that of Black and Scholes for financial options [2]. The results are compared to those obtained under the traditional Net Present Value approach.

Decision Making Under Uncertainty in Pipeline Projects Using Monte Carlo Simulation

2004 ◽  
Author(s):  
Claudio de Brito Garcia ◽  
Leandro Bastos Machado
Keyword(s):  
Monte Carlo Simulation ◽  
Monte Carlo ◽  
Risk Analysis ◽  
Capital Investment ◽  
Net Present Value ◽  
Investment Project ◽  
Free Cash Flow ◽  
Investment Projects ◽  
Economical Analysis ◽  
Natural Gas Transmission

Uncertainty about a situation can often indicate risk, which is the possibility of loss, damage, or any other undesirable event. Most people and organization desire low or minimized risk, which would translate to stand to a scenario of high probability of success, profit, or some form of gain. This work shows the importance of risk analysis when it comes to compare two capital investment projects in the natural gas transmission business. A transmission company needs to choose between two alternatives for capacity expansion of a pipeline, with a maximum value for the transmission tariff previously agreed to the shipper. At first, the transmission tariff is calculated by the conventional method that comprises iterative calculation from an arbitrary value, until the project Net Present Value (NPV) reaches zero. Once calculated, the lower of the transmission tariffs associated to the two expansion projects indicates the best choice. That’s the way the majority of companies perform their economical analysis of the proposed problem. Monte Carlo Simulation risk analysis technique is a powerful tool to asses the risk associated to a capital investment project, which can be summarized as the probability of undesired results. The risk calculation is based on the uncertainties associated to the input data used to build the project free cash flow, and the simulation produces a frequency distribution, or histogram, for, the NPV of a project. As will be seen in the work, the investment with the largest expected NPV may not always be the best investment alternative.

scholarly journals Comparative analysis of the most important economic criteria for the company’s investment projects

2021 ◽  
pp. 125-141
Author(s):  
Vladymyr Iankovyi
Keyword(s):  
Comparative Analysis ◽  
Net Present Value ◽  
Investment Project ◽  
Rate Of Return ◽  
Internal Rate Of Return ◽  
Present Value ◽  
Investment Projects ◽  
Internal Rate ◽  
Future Production ◽  
Economic Criteria

The theoretical aspects of company’s investment management are discussed. The properties and characteristics of seven main economic criteria-indicators of investment projects, in particular, net present value, profitability index, simple and modified internal rate of return, simple and discounted payback period, efficiency coefficient are considered in detail. The aim of the study is a critical comparative analysis of the most important economic criteria of the company’s investment projects, such as internal rate of return (IRR) and modified internal rate of return (MIRR), their advantages and disadvantages, as well as further development of objective theoretical ideas about properties and relationships criteria for future investments, in particular, between the profitability index (PI) and the modified internal rate of return (MIRR).The economic and mathematical properties of the function describing the dependence of the net present value on the value of the discount rate are studied. The attention of project analysis specialists and top managers of companies is drawn to the shortcomings of the internal rate of return, which, in certain cases, due to the peculiarities of the calculation carries a potential threat of artificially overestimating the efficiency of an investment project. This fact is a significant basis for a complete rejection of using this indicator as a quantitative characteristic of the effectiveness of future production and financial projects. It is proposed to use exclusively the criterion «modified internal rate of return» as an indicator of efficiency of an investment project, which is completely objective, universal and can serve as a basis for calculating the profitability index. A formula of the functional interrelation between the value of the modified internal rate of return and the profitability index of the future production and financial projects of the company is derived.

scholarly journals A Simulation Integrated Investment Project Ranking and Selection Approach

2012 ◽  
Vol 2 (2) ◽  
pp. 153-172
Author(s):  
Ozgur YALCINKAYA ◽  
Ozgur ARMANERI
Keyword(s):  
Investment Decision ◽  
Investment Project ◽  
Project Evaluation ◽  
Ranking And Selection ◽  
Optimal Decision ◽  
Selection Procedures ◽  
Investment Projects ◽  
Simulation Based ◽  
Ranking And Selection Procedures ◽  
Project Ranking

Enterprises are confronted with several project alternatives that they assume to gain revenue in the future, but their own economical resources are limited to carry out all alternatives. Therefore, a decision process arises to prioritize and select among alternatives according to the predetermined goals and criteria to reach the maximum utilization. On the other hand, in project evaluation, the values of project parameters are often assumed to be known with complete certainty. However, project parameters normally change during a life cycle of the project, and it is necessary to consider uncertainty and risk phenomena while evaluating projects. Simulation-based project evaluation approaches enable to make more reliable investment decision since they permit to include future uncertainty and risk in analysis process. In this article, a novel simulation-based optimal decision approach is proposed for evaluating and comparing investment projects under uncertain and/or risky environments. The phases of the proposed approach are; (a) developing the effectiveness measure formulation of a project, (b) identifying and checking all controllable project parameters that affect the measure, (c) developing simulation model for the measure, and (d) performing the project ranking and selection procedures in order to rank and select the projects. Three ranking and selection procedures, previously used for comparing performances of the different production/service systems, are embedded in the proposed approach.

scholarly journals SISTEM PENUNJANG KEPUTUSAN CALON DESA PENERIMA AIR BERSIH DI KECAMATAN SUMBERLAWANG SRAGEN MENGGUNAKAN METODE SIMPLE ADDITIVE WEIGHTING

2018 ◽  
Vol 6 (1) ◽  
Author(s):  
Novianto Tri Sasongko ◽  
Sri Tomo ◽  
Sri Hariyati Fitriasih
Keyword(s):  
Decision Support ◽  
Decision Support System ◽  
Programming Language ◽  
Support System ◽  
Attribute Selection ◽  
Weighting Method ◽  
Decision Supporting ◽  
Decision Supporting System ◽  
Simple Additive Weighting

The purpose of this study is to make a decision support system that makes it easier for Sumberlawang District in terms of determining candidate villages receiving clean water in the area. So that the determination of distribution becomes faster and precise. The system built by the author uses a decision support method that is Simple Additive Weighting (SAW). In performing attribute selection, the author uses 4 criteria in determining the selection of water recipient village candidates. The programming language of the author uses the programming language HyperText Preprocessor (PHP). The software that supports in making applications that Macromedia Dreamweaver, Mysql, and Adobe Photoshop. The author in terms of performing performance calculations of the system using Blackbox method by applying the method, then the performance of the application built by the author has a system performance level of 100%. The result of the use of SAW method is the creation of a Decision Supporting System Support System for Water Recipient Village in Sumberlawang Sragen Using Simple Additive Weighting Method which is very helpful to Sumberlawang Sub-District in Determination of Potential of Recipient of Clean Water.Keywords: Decision Support System, SAW Method, Water Distributor.

scholarly journals RISK MANAGEMENT METHODOLOGY OF INVESTMENT PROJECTS WITH ENVIRONMENTAL IMPACT

2016 ◽  
Vol 21 (1) ◽  
Author(s):  
ELENA GINDU ◽  
AUREL CHIRAN ◽  
BENEDICTA DROBOTĂ ◽  
ANDY-FELIX JITĂREANU
Keyword(s):  
Risk Management ◽  
Environmental Impact ◽  
Net Present Value ◽  
Investment Project ◽  
Project Schedule ◽  
Investment Projects ◽  
Risk Of Failure ◽  
Impact Risk ◽  
Risk Management Methodology ◽  
Legislative Changes

In projects, a strategic component is to identify all risks that might influence their success, prevent and manage them effectively. Risk management is essential to add value to an investment and improve results. With the economic and financial crisis in recent years, increasingly, more companies have realized the importance of using a system of risk management, given the multitude of variables that can influence the success of a project. These include: legislative changes, global political and economic instability, natural disasters, climate change, human resources, liquidity risk, environmental impact, risk of erroneous calculation of total project costs, risk of failure into initial project schedule, prolongation risk, the risk of failure of internal rate of return (IRR) and net present value (NPV) etc. The study proposes a new method of risk assessment and management in the investments projects with environmental impact and its application in a case study. The method will take into consideration besides the economic and financial indicators, hard to be understood by smaller investors, a set of simple and important questions that they have to analyze before deciding to start an investment project. The new methodology will have a comprehensive approach from identifying the investment opportunity, writing investment project until its implementation. This will take into account macroeconomic variables and the microeconomic environment that can influence the success of project implementation. The main advantage of applying the new methodology are: knowing all the variables that influence the success of a project realization; awareness of the importance of applying an effective risks management related to investment projects with environmental impact, increasing the quality and success of projects.

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