Applying the maximum NPV rule with discounted/growth factors to a flexible production scale model
This study examines the maximum net present value of the market entry and exit thresholds derived by the traditional net present value method and combines the real options approach for the project investment or disinvestment. The discounted and growth factors are incorporated into the proposed entry and exit models, facilitating the complicated calculations required to identify the discounted and growth rates so as to assess and determine the expected present value of uncertain cash flow streams. Consequently, this investigation successfully combines applying the maximum net present value method and the real options approach to decision-making with the simple consideration of the discounted and growth factors in the flexible production scale model.
Year of publication: |
2009
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Authors: | Lin, Tyrone T. |
Published in: |
European Journal of Operational Research. - Elsevier, ISSN 0377-2217. - Vol. 196.2009, 2, p. 628-634
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Publisher: |
Elsevier |
Keywords: | Maximum NPV Discounted and growth factors Flexible production scale Entry and exit Real options |
Saved in:
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