Economic Calculus Qua an Instrument to Support Sustainable Development under Increasing Risk

Investment decisions in the field of sustainable development should be taken based on an economic calculation, taking into account the analysis of a diverse economic environment. The economic calculus of an enterprise is treated as a kind of way of thinking about the rationality of decisions made by an entrepreneur. In the case of sustainable development, the economic calculus serves as an instrument to support the selection of the investment measure. The result of the economic calculus is based on various types of economic parameters, which are subject to frequent changes and high risk. A risk-based financial account may be of little use in the context of the unpredictability of the forecasted situations. In the article, I attempted to determine the importance of a variable interest rate in the economic calculus of a company as an instrument to support sustainable development. For this purpose, I modified the Net Present Value (NPV) meter, which contains actual (variable) discount rates.

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Analysis of economic-financial viability, by the monte carlo method, in service provider of non-destructible tests: case study

Independent Journal of Management & Production ◽

10.14807/ijmp.v11i4.1082 ◽

2020 ◽

Vol 11 (4) ◽

pp. 1454

Author(s):

Vanessa Miguel Augusto Souza ◽

Nilson Brandalise

Keyword(s):

Monte Carlo ◽

Monte Carlo Method ◽

Net Present Value ◽

Investment Decisions ◽

Internal Rate Of Return ◽

Present Value ◽

The Monte Carlo Method ◽

A Company ◽

Non Destructive

This work aims to present the economic-financial feasibility, through the application of the Monte Carlo Method, to assist managers in the decision making regarding the investment of a service contract of a company specialized in Non-Destructive Tests, with the tests of Penetrant Liquid and Ultrasound, to which the company that takes the service establishes the requirements previously. The method was apply, in 5000 iterations, from the established parameters, for the initial investment and demand of the test diaries, which provided data regarding the average for the Net Present Value (NPV), Internal Rate of Return (IRR) and Profitability Index (PI), as well as the possible standard deviations, established by the coefficient of variation. Finally, after analyzing the data, it was check that the Method is useful to assist in the making of investment decisions, being feasible the adherence of the contract studied, through the analyzed data and established criteria.

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Research on Power Grid Investment Risk of Set-Analysis Method in New Electricity Reform

MATEC Web of Conferences ◽

10.1051/matecconf/201822702017 ◽

2018 ◽

Vol 227 ◽

pp. 02017

Author(s):

Jianchang Lu ◽

Dandan Xing

Keyword(s):

Net Present Value ◽

Risk Model ◽

Power Grid ◽

Investment Decisions ◽

Investment Risk ◽

Analysis Method ◽

Present Value ◽

Profit Model ◽

Factors Affecting ◽

Pair Analysis

In view of the change in the profit model of the power grid under the new power reform, If grid companies want to improve their economic efficiency, they must expand the scale of effective assets of fixed assets and increase the number of effective assets within the understanding of the demand for electricity.By determining the factors affecting the power grid investment in the new environment,a risk model for the power grid investment under the new power reform is constructed.First,this paper uses the set pair analysis method algorithm and derives the relevant formula to quantify uncertainties in grid investment risk.Then,it gets the results of the calculation of the degree of connection of each scheme and combine set pair events with a net present value less than 0 for each set evens.At last,based on the above results,we get the best investment plan.Verified by the case of the HBN grid company,it shows that the investment risk model established is feasible and can provide an appropriate reference for the new power companies to change their investment decisions.

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Computing Capital Budgeting for Banking Sector

Psychology and Education Journal ◽

10.17762/pae.v58i2.3183 ◽

2021 ◽

Vol 58 (2) ◽

pp. 6502-6508

Author(s):

Sushain Koul, Dr. Parag Ravikant Kaveri

Keyword(s):

Financial Management ◽

Banking Sector ◽

Net Present Value ◽

Average Rate ◽

Capital Budgeting ◽

Rate Of Return ◽

Present Value ◽

Banking Organization ◽

Long Run ◽

Selection Of

Perhaps the most difficult hurdle which companies come across is the selection of the project which is beneficial to the organization in the long-run and also increases the present value of the shareholders. This is where Capital Budgeting comes into play. Capital Budgeting is one of the most important areas of financial management. This paper gives an overview of what capital budgeting is, what different types of techniques comes under capital budgeting and how to represent capital budgeting technique algorithmically. In this paper we also throw some light on what the results of various capital budgeting techniques will be if any banking organization follows these techniques and compare those results. These techniques namely as Payback Period (PP), Average Rate of Return (ARR), Net Present Value (NPV), Profitability Index (PI) and Internal Rate of Return (IRR) are used to evaluate projects.

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Risk Manage Capital Investment Decisions: A Lease vs. Purchase Illustration

Journal of Applied Business Research (JABR) ◽

10.19030/jabr.v25i3.1031 ◽

2011 ◽

Vol 25 (3) ◽

Author(s):

Thomas L. Zeller ◽

Brian B. Stanko

Keyword(s):

Capital Investment ◽

Net Present Value ◽

Investment Decisions ◽

Capital Budgeting ◽

Rate Of Return ◽

Internal Rate Of Return ◽

Wealth Creation ◽

Font Size ◽

Present Value ◽

Internal Rate

This paper demonstrates how to build risk into capital investment decisions.  We illustrate how to combine distribution theory, technology, and a business professional’s skills and insight into a capital investment analysis.  In addition, we show how management can approximate the risk of each cash flow estimate and display the overall capital investment results.  This framework is extended by showing how a mutually exclusive decision can be improved, using a lease versus purchase example.<a style="mso-footnote-id: ftn1;" name="_ftnref1" href="http://journals.cluteonline.com/index.php/JABR/author/saveSubmit/#_ftn1">[1]</a>  An Excel template is readily available from the authors allowing a hands-on application of the framework presented in this paper.  In addition, this paper positions the reader to comfortably use more advanced analytics, such as Monte Carlo simulation, a tool that is readily available in commercial software applications.<div style="mso-element: footnote-list;"> <hr size="1" /><div id="ftn1" style="mso-element: footnote;">This paper focuses on the application of net present value.  The advantage of using net present value in a capital budgeting decision is that it shows the potential stakeholder wealth creation and wealth destruction.  An internal rate of return analysis is intentionally left out of this paper.  According to Brealey, Myers and Allen, Principles of Corporate Finance, New York, NY: McGraw-Hill/Irwin 2006, pp. 91-99, internal rate of return should not be used to evaluate mutually exclusive capital investments.  </div></div>

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Investment decisions, net present value and bounded rationality

Quantitative Finance ◽

10.1080/14697680902849338 ◽

2009 ◽

Vol 9 (8) ◽

pp. 967-979 ◽

Cited By ~ 25

Author(s):

Carlo Alberto Magni

Keyword(s):

Bounded Rationality ◽

Net Present Value ◽

Investment Decisions ◽

Present Value

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Muebles artesanales a base de neumáticos reciclados: Análisis de viabilidad para su elaboración y comercialización

ECA Sinergia ◽

10.33936/eca_sinergia.v11i2.2358 ◽

2020 ◽

Vol 11 (2) ◽

pp. 77

Author(s):

Mauricio Ivan Merino ◽

Jorge Luis Merino ◽

Daniela Nicole Quimbiulco ◽

Karina Karam

Keyword(s):

Net Present Value ◽

Internal Rate Of Return ◽

Qualitative And Quantitative Analysis ◽

Present Value ◽

Business Economics ◽

Business Opportunity ◽

Qualitative And Quantitative ◽

Palabras Clave ◽

Potential Market ◽

A Company

La contaminación por abandono de neumáticos en basureros es una amenaza contra el medio ambiente. En Ecuador se desechan 2,4 millones al año, la mayoría son depositados en basureros al aire libre. El objetivo de esta investigación fue determinar la viabilidad de implementar una empresa de elaboración y venta de muebles artesanales basados en llantas recicladas. Se utilizó la metodología basada en el análisis cualitativo y cuantitativo del cliente; descripción de oportunidad de negocio; y evaluación financiera. El mercado potencial son hombres y mujeres entre 20 y 64 años de clase social media, la estructura organizacional estará basada en una estructura lineal - funcional compuesta por tres áreas específicas. El negocio requiere una inversión inicial de $ 62.909,68. El proyecto refleja un valor actual neto y tasa interna de retorno positivo, y tiempo de recuperación menor a los 5 años, lo cual refleja que el negocio es viable y rentable. Palabras clave: producción; inversión; creación de empresas; economía de la empresa; marketing. Abstract Pollution from tire abandonment in garbage dumps is a threat against the environment, in Ecuador 2.4 million are disposed annually, most are deposited in outdoor garbage dumps. The objective of this research was to determine the feasibility of implementing a company that produces and sells handmade furniture based on recycled tires. The methodology based on the qualitative and quantitative analysis of the client was used; business opportunity description; and financial evaluation. The potential market is men and women between 20 and 64 years of middle social class, the organizational structure will be based on a linear-functional structure composed of three specific areas. The business requires an initial investment of $ 62.909, 68. The project reflects a positive net present value and internal rate of return, and recovery time less than 5 years, which reflects that the business is viable and profitable. Keywords: production; investment; creation of companies; business economics; marketing.

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An analysis of capital budgeting methods, the cost of capital and decision-makers in listed South African firms

Corporate Ownership and Control ◽

10.22495/cocv9i2c5art7 ◽

2012 ◽

Vol 9 (2) ◽

pp. 519-529

Author(s):

John H. Hall

Keyword(s):

South African ◽

Net Present Value ◽

Cost Of Capital ◽

Capital Budgeting ◽

Decision Makers ◽

Internal Rate Of Return ◽

Present Value ◽

The Cost ◽

Academic Qualifications ◽

A Company

This study’s purpose was to link the length of decision-makers’ employment in a firm and their academic qualifications to their choice of capital budgeting methods and of cost of capital techniques. The results show that the net present value (NPV) is more popular than the internal rate of return (IRR) as a capital budgeting technique. Also, irrespective of how long respondents have been employed by a company, they all use a discount rate. However, there is a significant tendency among respondents with postgraduate qualifications to prefer the NPV as a capital budgeting technique. Thus, in South Africa, academic qualifications do play a role in decision-makers’ capital budgeting practices.

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The Method of Real Options in the Evaluation of Strategic and Investment Decisions

Scientific Research and Development Economics ◽

10.12737/article_59393a6b428b54.77069649 ◽

2017 ◽

Vol 5 (3) ◽

pp. 41-45

Author(s):

Гераськина ◽

A. Geraskina

Keyword(s):

Real Options ◽

Real Option ◽

Net Present Value ◽

Option Price ◽

Investment Decisions ◽

Present Value ◽

Discounted Cash Flow ◽

Investment Projects ◽

Important Addition ◽

Discounted Cash Flow Method

The method of real options is one of the new approaches to estimate investment projects’ cost and it is an important addition to discounted cash flow method. Real option significantly increases the efficiency of the project due to the possibility of decision-making during its implementation. This aspect is especially important in unstable environmental conditions. The main differences between the financial and real options are presented. The differences of valuation of investment projects by the real options method and net present value are examined. The article presents the types of real options, as well as the methods of calculating the option price.

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Influence of Taxation on Investment Decisions by Entrepreneurs

Olsztyn Economic Journal ◽

10.31648/oej.3198 ◽

2013 ◽

Vol 8 (1) ◽

pp. 35-44

Author(s):

Renata Burchart ◽

Henryk Lelusz

Keyword(s):

Net Present Value ◽

Investment Decisions ◽

Investment Project ◽

The Other ◽

Present Value ◽

Decision Taking

The example presented in the paper explains operation of the phenomenon known in the literature as the "taxation paradox" that means that the net present value of the investment after considering taxation is higher than the net present value after taxation or the other way round. The aim is to present that dismissing the taxation aspects in the decision taking processes may result in inappropriate choices or lead to resignation from a profitable investment project by investors.

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Међузависност додате економске вредности, нето садашње вредности и тржишне вредности предузећа // Interdependence of Economic Value Added, Net Present Value and Market Value of a Company

ACTA ECONOMICA ◽

10.7251/ace1522053i ◽

2018 ◽

Vol 13 (22) ◽

pp. 53

Author(s):

Милорад Иванишевић

Keyword(s):

Net Present Value ◽

Economic Value ◽

Value Added ◽

Market Value ◽

Company Performance ◽

Economic Value Added ◽

Present Value ◽

Market Value Added ◽

One Year ◽

A Company

Резиме: У чланку се најпре разматра додата економска вредност као метод за мерење перформанси предузећа у временским интервалима од годину дана. Затим се расправља о додатој тржишној вредности као разлици између тржишне вредности предузећа и вредности инвестираног капитала. После тога се објашњава међузависност додате економске вредности и додате тржишне вредности. На крају се показује да постоји повезаност нето садашње вредности као метода за оцену рентабилности инвестиција и тржишне вредности предузећа.Summary: Economic value added as a method for company performance measurement for time periods of one year is firstly analyzed in the paper. After that we discuss market value added as a difference between company market value and value of invested capital. Then the interdependence between economic value added and market value added is explained. Finally, we point out that there is relationship between net present value as a method for investment rentability evaluation and company market value.

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